Commonwealth Numbered Regulations - Explanatory Statements
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CLEAN ENERGY AMENDMENT REGULATION 2012 (NO. 7) (SLI NO 289 OF 2012)
EXPLANATORY STATEMENT
Select Legislative Instrument 2012 No. 289
Issued by the Authority of the Minister for Climate Change and Energy Efficiency
Clean Energy Act 2011
Clean Energy Amendment Regulation 2012 (No. 7)
Section 312 of the Clean Energy Act 2011 (the Act) provides, in part, that the Governor-General may make regulations prescribing matters required or permitted by the Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.
The Act, together with the other Acts in the Clean Energy Legislative Package, establishes the carbon pricing mechanism as part of the Government's climate change plan, as set out in the document Securing a Clean Energy Future: the Australian Government's Climate Change Plan.
The Clean Energy Amendment Regulation 2012 (No. 7) (the Regulation) amends the Clean Energy Regulations 2011 (the Principal Regulations) to:
- establish the liquid fuels Opt-in Scheme;
- prohibit the surrender of specified eligible international emissions units; and
- include an additional activity and sub-activity, add new ethane-specific Scope 3 emissions factors, and make administrative amendments to the Jobs and Competitiveness Program.
The liquid fuels Opt-in Scheme
Part 3, Division 7 of the Act provides that regulations may formulate a scheme that allows eligible users of certain fuels to 'opt in' to the carbon pricing mechanism. This scheme is known as the 'Opt-in Scheme'.
The policy that is implemented in the proposed Regulation is consistent with the approach suggested in the consultation paper Proposal for the Liquid Fuels Opt-in Scheme that was released in May 2012, and the exposure draft of the regulations that was released in October 2012.
The Regulation allows a person to be named as the designated opt-in person (DOIP) for specified eligible fuel. A DOIP will then be liable under the Act for the potential emissions embodied in an amount of liquid fuel. A DOIP may be liable when it acquires, manufactures or imports ('acquires') fuel for its own use of liquid fuel, or for the acquisition for use of liquid fuel by persons who were the members of its GST group or participants in its GST joint venture.
The Regulation sets out eligibility to opt-in, liability under the Opt-in Scheme, and administrative arrangements.
Prohibition on the surrender of specified eligible international emissions units
Subsection 123(1) of the Act provides that the regulations may make provision for, or in relation to, prohibiting the surrender of specified eligible international emissions units. This is to ensure that only credible international emissions units are used for compliance, supporting the environmental integrity of Australia's pollution reduction efforts.
The Government announced in its policy document Securing a clean energy future: The Australian Government's climate change plan (Table 8 on p.107) and in the revised explanatory memorandum to the Clean Energy Bill 2011 (at paragraph 3.108) that certified emission reductions and emissions reduction units arising from particular types of projects would not be able to be surrendered under the carbon pricing mechanism. These projects were: nuclear projects; the destruction of trifluoromethane; the destruction of nitrous oxide from adipic acid plants; and large scale hydro power projects that are inconsistent with criteria adopted by the European Union (based on the World Commission on Dams guidelines). The Regulation amends the principal Regulations to give effect to this policy.
Amendments to the Jobs and Competitiveness Program
The Regulation amends the principal Regulations to:
- include the production of pulp from recovered paper as an eligible sub-activity for the eligible emissions-intensive, trade-exposed (EITE) activity printing and writing paper manufacturing under the Jobs and Competitiveness Program (the Program) and outline the baseline in Part 4 for determining the amount of assistance in the form of free carbon units that each applicant would be eligible for in relation to the sub-activity;
- include the production of nickel as an eligible EITE activity under the Program and outline the baselines in Part 4 for the activity that are to be used in determining the amount of assistance for each applicant in relation to the activity;
- provide for an extension to the deadline for applications for assistance for the nickel activity to 31 March 2013; and
- include an ethane-specific emissions allocation factor in Division 4 of Part 9 for determining the amount of assistance in the form of free carbon units that each applicant would be eligible for in relation to the production of ethene EITE activity.
One of the objects of the Act is to put a price on greenhouse gas emissions in a way that supports jobs and competitiveness in the economy. Part 7 of the Act provides for the establishment of the Program to support jobs and protect the competitiveness of EITE industries from risks that those industries will be located in, or relocated to, foreign countries as a result of different climate change policies applying in Australia compared to foreign countries. The Program also provides support for industry, local communities and workers to have a smooth transition to a clean energy future.
Section 145 of the Act provides that the Regulations may formulate the details of the Program for the annual issue of free carbon units in relation to EITE activities as defined by the Program. EITE activities are industrial activities that produce a lot of carbon pollution but where the capacity of entities undertaking those activities to pass through costs is constrained where prices are set by global markets. The Program was first established in amendments to the principal Regulations on 24 February 2012.
Subsection 145(5) of the Act provides that in making a recommendation to the Governor-General about regulations that amend regulations made for the purposes of subsection 145(1) of the Act, the Minister must have regard to the following matters:
- the aim and objects of Part 7 of the Act;
- the most recent report given to the Productivity Minister by the Productivity Commission in relation to an inquiry mentioned in section 155 of the Act;
- the principle that changes that will have a negative effect on recipients of assistance under the Program should not take effect before the later of the following
o 1 July 2017; and
o the end of the three-year period that begins when the reduction is announced;
- such other matters (if any) as the Minister considers relevant.
There are currently no relevant reports from the Productivity Commission.
A summary of the key amendments made by the Regulation is provided at Attachment A.
A Human Rights Statement in respect of the Regulation is included at Attachment B.
Details of the Regulation are set out in Attachment C.
The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Sections 1 to 3 and Schedule 1 of the Regulation commences on the day after it is registered, and Schedule 2 commences on the later of the day after it is registered and the commencement of Schedule 1, Part 1 of the Clean Energy Amendment (International Emissions Trading and Other Measures) Act 2012 (Schedule 2).
Consultation
The Clean Energy Act and Clean Energy Regulations reflect the outcomes of comprehensive consultation with the public and stakeholders.
In September 2010 the Government announced the establishment of the Multi-Party Climate Change Committee (MPCCC) to consult, negotiate, and report to the Cabinet, through the Minister for Climate Change and Energy Efficiency, on agreed options for the implementation of a carbon price in Australia; and to provide advice on, and participate in, building community consensus for action on climate change.[1]
On 24 February 2011, the Prime Minister announced the climate change framework outlining the broad architecture for a mechanism, which had been considered by the MPCCC. The proposed mechanism focused on the high level architecture, start date, potential mechanisms to allow flexibility to move to emissions trading, sectoral coverage and international linking arrangements.
DCCEE conducted a public consultation process on the proposed mechanism in April and May 2011.
On 10 July 2011, the Government published Securing a clean energy future: The Australian Government's climate change plan. This set out the details of the mechanism and related proposals for fostering renewable energy generation, energy efficiency and action on the land. It also set out measures to assist Australian households and businesses to adapt to the mechanism and to support energy markets.
On 28 July 2011, the Government released the following draft bills to implement the mechanism and related initiatives for public comment:
* Clean Energy Bill 2011;
* Clean Energy (Consequential Amendments) Bill 2011;
* Clean Energy Regulator Bill 2011;
* Climate Change Authority Bill 2011;
* Clean Energy (Unit Shortfall Charge--General) Bill 2011;
* Clean Energy (Unit Issue Charge--General) Bill 2011;
* Clean Energy (Charges--Excise) Bill 2011;
* Clean Energy (International Unit Surrender Charge) Bill 2011;
* Ozone Protection and Synthetic Greenhouse Gas (Manufacture Levy) Amendment Bill 2011;
* Ozone Protection and Synthetic Greenhouse Gas (Import Levy) Amendment Bill 2011;
* Fuel Tax Legislation Amendment (Clean Energy) Bill 2011;
* Excise Tariff Legislation Amendment (Clean Energy) Bill 2011; and
* Customs Tariff Amendment (Clean Energy) Bill 2011.
During the period from 28 July 2011 to 22 August 2011, DCCEE:
* met with government representatives from the States and Territories;
* convened a forum for peak industry, environmental, community and other non-government organisations;
* convened three legal experts workshops (in Sydney, Melbourne and Brisbane);
* convened four technical working group meetings on the treatment of natural gas, the point of liability and landfill (in Canberra and Perth);
* conducted meetings and teleconferences with business representative groups, businesses and other stakeholders; and
* received over 300 submissions on the draft legislation.
The liquid fuels Opt-in Scheme
The Department of Climate Change and Energy Efficiency (the Department) undertook consultation to develop policy for an opt-in arrangement for liquid fuels, including during the consultation period for the Clean Energy Future package.
The Department released a consultation paper Proposal for the liquid fuels Opt-in Scheme in May 2012 and 13 submissions were received.
An exposure draft of the Regulations was released on 18 October 2012. The Department received seven submissions on the draft, which were considered in the preparation of the Regulation. The Department has had numerous direct discussions with businesses, the Regulator (the Regulator) and the Australian Tax Office in the development of the Opt-in Scheme.
Prohibition on the surrender of specified eligible international emissions units
The Regulation implements the Government's policy, previously announced in the Government's policy document Securing a clean energy future: The Australian Government's climate change plan (Table 8 on p.107) and mentioned in the explanatory memorandum to the Clean Energy Bill 2011 (at paragraph 3.108). No submissions concerning the Regulations to prohibit the surrender of eligible international emissions units were received during the consultation period. One late submission on the surrender prohibition was received, which concerned broader policy issues and did not propose any changes to the Regulations. The Department has consulted with the Regulator regarding the implementation of the surrender prohibition regulations.
Amendments to the Jobs and Competitiveness Program
The Department has undertaken an extensive consultation process to establish the eligibility of EITE activities and develop Regulations to implement the Program.
The policy framework for determining the eligibility of EITE activities for assistance under the Program was originally developed in 2009 and has been used to establish the eligibility of activities with respect to assistance provided under the Renewable Energy Target (RET) scheme - Renewable Energy (Electricity) Act 2000. The process for assessing activities and defining the technical aspects of the activities, including setting assistance rates and allocative baselines, is outlined in the paper titled Establishing the eligibility of activities under the Jobs and Competitiveness Program.
The formal process for defining and determining the eligibility of an EITE activity involves a stakeholder workshop to formulate an appropriate activity definitions and boundary, and approval of the activity definition by the Minister for Climate Change and Energy Efficiency for the purposes of data collection. Audited data based on the approved definition is then submitted to the Government. If determined to be eligible, stakeholders in the relevant industry are consulted in regard to the drafting of the definitions to be included in the Regulations to ensure that the structure of the definitions generally reflects the conduct of the activities.
The Minister has taken into consideration the principles under subsection 145(5) of the Act regarding changes that will have a negative impact on recipients of assistance under the Program.
Authority: Section 312 of the Clean Energy Act 2011
Attachment A
Summary and Policy Guidance on the Clean Energy Amendment Regulation 2012 (No. 7)
The liquid fuels Opt-in Scheme
Schedule 1
Schedule 1 to the Clean Energy Amendment Regulation 2012 (No. 7) (the Regulation) amends the Clean Energy Regulations 2011 (the Principal Regulations) to create a scheme that establishes when a person may be liable under the Clean Energy Act 2011 (the Act) for emissions embodied in liquid fuel. This scheme is known as the Opt-in Scheme.
The Opt-in Scheme is allowed for in Part 3, Division 7 of the Act. The purpose of the Scheme is to allow large users of liquid fuel to opt-in to the carbon pricing mechanism for the potential emissions embodied in the fuel they use, rather than facing an effective carbon price through the fuel tax or excise systems.
Section 92A of the Act provides that under the Scheme a person may be declared a designated opt-in person (DOIP) and be liable under the Act for the emissions embodied in an amount of specified fuel where:
- there has been an acquisition, manufacture or import of taxable fuel that a person is entitled to a fuel tax credit for;
- a person has made an application;
- passed the eligibility test at subsection 92A(4); and
- met any conditions specified in the Regulations.
The Regulation establishes the conditions under which a person may be declared a DOIP, and the administrative arrangements for opting-in and opting-out under the Opt-in Scheme.
Schedule 2
Schedule 2 to the Regulation amends the eligibility test found in Schedule 1 to bring it in line with the amendments to the Act that are contained in the Clean Energy Amendment (International Emissions Trading and Other Measures) Bill 2012 (the Linking Bill). The Schedule commences on the later of the day after the Regulation is registered, or on the commencement of the Clean Energy Amendment (International Emissions Trading and Other Measures) Act 2012. The Linking Bill passed the Senate on 26 November 2012 but will not commence until the day after it receives the Royal Assent. The Linking Bill is expected to receive the Royal Assent in December 2012 or early in 2013.
Amendments to the Jobs and Competitiveness Program
The Regulation amends Schedule 1 of the principal Regulations to:
- prescribe an additional sub-activity, the production of pulp from recovered paper, in the eligible EITE activity printing and writing paper manufacturing under Part 3 by providing details and specifications of the sub-activity, including the rate of assistance that applies to the sub-activity and the relevant product produced in undertaking the activity which forms the basis of the issue of the free carbon units;
- prescribe an additional eligible EITE activity, production of nickel, under Part 3 by providing the details and specifications of the activity, including the rate of assistance that applies to the activity and the relevant product produced in undertaking the activity which forms the basis of the issue of free carbon units;
- outline the baselines in Part 4 for the new eligible EITE activity and sub-activity that are to be used in determining the amount of assistance for each applicant in relation to the emissions, electricity use and natural gas used as a feedstock for the EITE activity and sub-activity;
- provide for an extension to the deadline for applications for assistance for the nickel activity to 31 March 2013; and
- include an ethane-specific emissions allocation factor in Division 4 of Part 9 for determining the amount of assistance in the form of free carbon units that each applicant would be eligible for in relation to the production of ethene EITE activity.
In accordance with subsection 145(5) of the Act, the Minister for Climate Change and Energy Efficiency has given regard to the aim and objects of Part 7 of the Act and the principle that changes that will have a negative effect on recipients of assistance under the Program should not take effect before the later of the 1 July 2017 or the end of the 3-year period that begins when the reduction is announced.
Attachment B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Clean Energy Amendment Regulation 2012 (No. 7)
This Regulation is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Clean Energy Amendment Regulation 2012 (No. )
The Regulation:
* establishes the Opt-in Scheme, which allows large users of liquid fuel to manage their carbon liability for that fuel under the carbon pricing mechanism instead of paying the equivalent carbon price through the fuel excise and fuel tax credit systems (Schedule 1, item [13], together with items [15]-[17]; Schedule 2, items [1]-[3]);
* makes an additional activity and sub-activity eligible under the Jobs and Competitiveness Program (the Program), which provides targeted assistance for industries that produce a lot of carbon pollution but are constrained in their capacity to pass through costs in global markets (Schedule 1, items [18]-[22]);
* provides an ethane-specific allocation factor used to calculate assistance under the Program for entities conducting eligible activities that use ethane as a feedstock (Schedule 1, items [22]-[23]); and
* gives effect to the Government's announced policy position on the initial restrictions on international units that will be accepted for surrender under the carbon pricing mechanism (Schedule 1, item [14]).
Human rights implications
The Regulation engages the right to privacy and reputation.
A person who applies to opt-in to the carbon pricing mechanism must be a non-individual. When opting-in, the person must give the Clean Energy Regulator (the Regulator) contact details for certain individuals within their organisation (regulations 3.36(2)(b) and 3.41(2)(b) and paragraphs (e)(ii), (f) and (h)-(j) of the definition of 'identifying information' in regulation 1.3) and contact details for certain individuals within each member of, or participant in, the person's GST group or GST joint venture (regulation 3.48(2)(c)). These contact details may constitute personal information about the individuals concerned.
The collection of these contact details is necessary to enable the Regulator to administer the Opt-in Scheme, as the details will be used to help verify the identity of the applicant and provide a primary point of contact for the Regulator. The contact details for these individuals will not be publicly disclosed, but will be regulated under the secrecy provisions set out in the Clean Energy Regulator Act 2011.
Conclusion
The Regulation is compatible with human rights because, to the extent that it may limit those rights, that limitation is reasonable, necessary and proportionate.
Greg Combet
Minister for Climate Change and Energy Efficiency
Attachment C
Details of the Clean Energy Amendment Regulation 2012 (No. 7)
Section 1 - Name of Regulation
Section 1 provides that the name of the Regulation is the Clean Energy Amendment Regulation 2012 (No. 7).
Section 2 - Commencement
Section 2 provides that sections 1 to 3 and Schedule 1 of the Regulation commence on the day after they are registered on the Federal Register of Legislative Instruments, and that Schedule 2 commences on the later of the day after it is registered and the commencement of Schedule 1, Part 1 of the Clean Energy Amendment (International Emissions Trading and Other Measures) Act 2012.
Section 3 - Amendment of Clean Energy Regulations 2011
Section 3 provides that Schedules 1 and 2 amend the Clean Energy Regulations 2011 (the Principal Regulations).
SCHEDULE 1 - AMENDMENTS COMMENCING ON DAY AFTER REGISTRATION
Item [1] - Regulation 1.3, after the definition of contact details
Item [1] inserts the definition of 'designated opt-in person' into Regulation 1.3. 'Designated opt-in person' (DOIP), for the Opt-in Scheme, has the meaning given in regulation 3.30 - being a person declared by the Clean Energy Regulator (the Regulator) under regulation 3.37 as the person who is a DOIP in relation to an opt-in amount.
Items [2] to [9] - Note at the end of regulation 1.3
Items [2] to [9] insert the following terms to the Note at the end of regulation 1.3, indicating that section 5 of the Act contains its definition for the purposes of the Act and which would also apply in these regulations:
- Climate Change Convention
- eligible international emissions unit
- fuel tax credit
- GST group
- GST joint venture
- Information Database
- liable entity
- liquid petroleum fuel
- person
- Regulator
- surrender
- taxable fuel
Item [10] - After regulation 1.14
Item [10] inserts regulation 1.15, which allows tables of contents to be updated in consolidated versions of the Principal Regulations.
Item [11] - After Division 6 of Part 3
Item [11] inserts Division 7 - Opt-in Scheme to the regulations after Division 6 of Part 3. This Division is comprised of:
- Subdivision 7.1 - Preliminary (regulations 3.30-3.34);
- Subdivision 7.2 - Application for designated opt-in person (regulations 3.35-3.36);
- Subdivision 7.3 - Declaration of designated opt-in person (regulations 3.37-3.40);
- Subdivision 7.4 - Variation to declaration of designated opt-in person (regulations 3.41-3.42);
- Subdivision 7.5 - Designated opt-in person as a liable entity (regulations 3.43-3.47);
- Subdivision 7.6 - Notification, reporting and record keeping requirements (regulations 3.48-3.50)
Subdivision 7.1 - Preliminary
- Regulation 3.29 - Opt-in Scheme
Regulation 3.29 sets out that the following regulations constitute the Opt-in Scheme for Division 7 of Part 3 of the CE Act.
The Scheme provides when a DOIP will be a liable entity in relation to the acquisition, manufacture or importation of specified taxable fuel.
- Regulation 3.30 - Definitions
Regulation 3.30 provides definitions which are to be used in this Division for the purposes of the Opt-in Scheme:
designated opt-in person is a person declared by the Regulator under proposed regulation 3.37 as the person who is taken to be the DOIP in relation to an opt-in amount.
eligibility test means the test specified in regulation 3.32.
enterprise has the same meaning as in the Fuel Tax Act 2006 (the Fuel Tax Act), that is the meaning given by section 9-20 of the A New Tax System (Goods and Services Tax) Act 1999 (the GST Act).
entity has the same meaning as in the Fuel Tax Act, that is the meaning given by section 184-1 of the GST Act. See also regulation 3.31 (When an entity is entitled to a fuel tax credit).
GST Act means A New Tax System (Goods and Services Tax) Act 1999.
joint venture operator has the same meaning as in the Fuel Tax Act, being the meaning given by section 195-1 of the GST Act.
Opt-in amount is the amount of specified taxable fuel for which a DOIP will be declared to be liable. This will be the amount of specified taxable fuel that is declared by the Regulator under regulation 3.37, or, where a variation is in place in relation to a DOIP under regulation 3.42, the amount mentioned in the variation for the financial year.
participant, in relation to a GST joint venture, has the same meaning as in the Fuel Tax Act, that is the meaning given by section 195-1 of the GST Act.
provisional emissions number means the total liability for specified taxable fuel under the Opt-in Scheme, calculated by reference to subregulation 3.43(2).
representative member, of a GST group, has the meaning given by section 195-1 of the GST Act.
specified taxable fuel means taxable fuel of a kind specified for the Opt-in Scheme under regulation 3.33. Specified taxable fuel is defined as liquid petroleum fuel, which may be found in item 10 (other than subitem 10.19A to 10.19D) of the Excise Tariff Act 1921 (the Excise Tariff Act).
threshold test means the test specified in regulation 3.34, which specifies the threshold that must be met in order for a person to opt-in to the carbon pricing mechanism under the Opt-in Scheme.
- Regulation 3.31 - When an entity is entitled to a fuel tax credit
Regulation 3.31 provides when a person will be 'entitled to a fuel tax credit' for the purposes of Division 7 of the Regulation. The regulation excludes section 41-30 of the Fuel Tax Act from being considered when determining whether a person is entitled to a fuel tax credit. This exclusion is required to allow for the equal treatment of aviation and non-aviation fuel for the purposes of eligibility to apply under the Opt-in Scheme and the calculation of a DOIP's liability under the Scheme.
- Regulation 3.32 - Eligibility Test
Regulation 3.32 outlines the requirements a person must meet to pass the 'eligibility test' to be eligible to be declared a DOIP for an opt-in amount in relation to an acquisition, manufacture or import of specified taxable fuel during a financial year. The eligibility test is found in at section 92A(4) of the Act and is replicated in the regulation for clarity.
A person passes the eligibility test in relation to an acquisition of liquid petroleum fuel during a financial year if the person:
- was a member of a GST group at the start of the financial year where, if it is assumed that the fuel was acquired, manufactured or imported at the start of that financial year, the GST group would have been entitled to the fuel tax credit for that fuel; or
- was a member of a GST joint venture at the start of a financial year where, if it is assumed that the fuel was acquired, manufactured or imported at the start of that financial year, the GST joint venture would have been entitled to the fuel tax credit for that fuel; or
- if neither of these criteria apply, was the entity that was entitled to the fuel tax credit for the fuel.
The eligibility test ensures continuity between the carbon pricing mechanism and the equivalent carbon price paid through the fuel tax credit system. To provide the stability required by the Regulator, the eligibility test 'locks' the persons for which a DOIP is liable for a full financial year.
- Regulation 3.33 - Specified taxable fuel
Regulation 3.33 states that taxable fuel specified for the Opt-in Scheme is liquid petroleum fuel. Liquid petroleum fuel is defined in the Act as having the same meaning as in the National Greenhouse and Energy Reporting Regulations 2008:
liquid petroleum fuel means the following:
(a) excisable goods (within the meaning given by subsection 4 (1) of the Excise Act 1901) classified to item 10 (other than subitem 10.19A, 10.19B, 10.19C or 10.19D) of the Schedule to the Excise Tariff Act 1921;
(b) imported goods that would be classified to that item (other than subitem 10.19A, 10.19B, 10.19C or 10.19D) if the goods were manufactured in Australia.
This definition includes petrol, diesel, aviation fuel, and blends of fuel.
- Regulation 3.34 - Threshold test
Regulation 3.34 sets out the threshold test that must be met when a person applies to the Regulator to be a DOIP. The test allows two kinds of persons to opt-in: those that are large users of liquid fuels, and those that would otherwise have a carbon pricing mechanism liability.
In relation to the fuel threshold test, a fuel user is to have used an amount of eligible threshold fuel that has the potential greenhouse gas emissions embodied in the fuel having a carbon dioxide equivalent (CO2-e) of 25,000 tonnes or more in either of the two previous financial years before the opt-in would have effect. Alternatively, the fuel user must be likely to use such an amount in the financial year in which the opt-in would to have effect. The applicant passes the threshold test when these requirements are met by:
- if applying to be a DOIP as a GST group representative for its GST group - the GST group;
- if applying to be a DOIP as a GST joint venture operator for its GST joint venture - the GST joint venture; or
- in any other case - the person.
The fuel that may be used to meet the fuel threshold test is 'eligible threshold fuel'. This is fuel that is covered by the carbon pricing mechanism - that is, fuel that would be subject to an equivalent carbon price under the fuel tax or excise systems. This will exclude fuel that is used in the agriculture, fishing or forestry industries, and fuel used for heavy on-road transport.
In relation to the test of liability, this test allows a person to opt-in when they were on the LEPID for the financial year before they apply to opt-in or at the time that they apply. The threshold test also extends to persons that are likely to be liable entities in the year that the opt-in would be effective. The regulation provides the opportunity for persons to pass the threshold test where the person would have been liable but has transferred their liability using a liability transfer certificate.
The LEPID is required to be published on the Regulator's website. The LEPID for the 2012-13 financial year has been published at: http://www.cleanenergyregulator.gov.au/Carbon-Pricing-Mechanism/Liable-Entities-Public-Information-Database/LEPID-for-2012-13-Financial-year/Pages/default.aspx.
Subdivision 7.2 - Application for designated opt-in person
- Regulation 3.35 - Who may apply to be designated opt-in person
Regulation 3.35 sets out that a person may not be a DOIP if the person is an individual or is a foreign person. These requirements assist with ensuring the integrity of the Opt-in Scheme, and reduce the likelihood that the Opt-in Scheme could be used to avoid paying a carbon price on liquid fuel entirely.
For an application in relation to fuel acquired by the members of a GST group or the participants in a GST joint venture, the person must be the representative member of the GST group or the joint venture operator of the GST joint venture, respectively.
For an application in relation to fuel acquired, manufactured or imported by the person, the person must be the entity that was entitled to a fuel tax credit in relation to the fuel or a member of a GST group that is entitled to a fuel tax credit in relation to the fuel.
These requirements apply further conditions on the person that is applying to be the DOIP under the Opt-in Scheme. These conditions are intended to, so far as is possible, align the Opt-in Scheme with the fuel tax and excise system, through which the equivalent carbon price would otherwise be paid.
- Regulation 3.36 - Application for designated opt-in person
Regulation 3.36 sets out that an application to be a DOIP has to be made in a form approved by the Regulator, for a financial year that begins after 1 July 2013, and by 31 March before the 1 July on which the opt-in would have effect.
Applications must include the following information:
- evidence that the applicant is not an individual and not a foreign person;
- identifying information (defined in regulation 1.3 of the Principal Regulations) for the applicant, members of its GST group or GST joint venture (where relevant), and the entity that is entitled a fuel tax credit in relation to the acquisitions that are covered by the Opt-in Scheme;
- evidence that, if the applicant is declared to be a DOIP, that the applicant is likely to pass the eligibility test in the financial year to which the application relates;
- evidence that the applicant passes the threshold test; and
- the financial year in which the applicant requests the declaration is to have effect - this will be the financial year after the application is made.
The application must also include consent to the opt-in, including a guarantee, in accordance with regulation 3.47 ('Consent to be a liable entity') if the applicant is the representative member of a GST group, the joint venture operator of a GST joint venture, or a person who acquires the fuel for which they are liable and is a member of a GST group entitled to a fuel tax credit in relation to that fuel.
Subdivision 7.3 - Declaration of designated opt-in person
- Regulation 3.37 - Declared person is designated opt-in person
Regulation 3.37 sets out when a person will be declared a DOIP by the Regulator. The Regulator must declare an applicant to be a DOIP for an amount of fuel (the 'opt-in amount') if the Regulator is satisfied that: (regulation 3.37(1))
- the applicant is a person who may apply to be a DOIP under regulation 3.35;
- the application meets the requirements mentioned in regulation 3.36;
- the applicant has obtained consent from the members of its GST group or participants in its GST joint venture, or the person entitled to fuel tax credits for its fuel if this is required under subregulation 3.36(3);
- the applicant passes the threshold test mentioned in subregulation 3.34(1);
- if declared to be the DOIP, the applicant is likely to pass the eligibility test for the financial year that the applicant has requested the declaration have effect; and
- the amount, or part of the amount, of specified taxable fuel to be declared to be the opt-in amount for the applicant has not been declared to be an opt-in amount for another person for that financial year. This ensures that there are never two DOIPs for the same amount of specified taxable fuel, to avoid double-counting under the Scheme.
If the Regulator is satisfied of the above criteria, then the applicant will be declared to be a DOIP in relation to an opt-in amount. The opt-in amount will be: (regulation 3.37(2))
- for a DOIP that applied as a representative member of a GST group, the amount of specified taxable fuel that is acquired, manufactured or imported during the financial year by persons that were members of the GST group on 1 July of the financial year that is for the use of the members of the GST group and for the purposes of the GST group;
- for a DOIP that applied as a GST joint venture operator, the amount of specified taxable fuel that is acquired, manufactured or imported during the financial year by persons that were participants in the GST joint venture on 1 July of the financial year that is for the use of the participants in the GST joint venture and for the purposes of the GST joint venture; or
- for a DOIP that applied as the person who acquired, manufactured or imported specified taxable fuel, the amount of specified taxable fuel that the person acquired, manufactured or imported during the financial year that was for the person's use, and for the purpose of the person's enterprise.
A declaration that a person is taken to be a DOIP remains in effect until the Regulator decides the person is no longer a DOIP in accordance with regulation 3.45 ('Opting out of the Scheme'). However, the opt-in amount in relation to which a person is declared a DOIP may be reduced for a particular financial year in specific circumstances under regulation 3.42 ('Variation to declaration').
If the Regulator makes a declaration that a person is taken to be a DOIP then within 14 days of its being made it must provide a copy of the declaration to: the person who applied to be a DOIP, any members of the DOIP's GST group or participants in the GST joint venture (see regulation 3.36(2)(b)(ii) and (iii)), the Commissioner for Taxation and the Chief Executive Officer of Customs (as defined in the Customs Administration Act 1985).
As a declaration that a person is a DOIP affects their fuel tax credit entitlement, and imposes other obligations on the DOIP as a liable entity, the Regulator's notification allows the DOIP and any relevant persons to take appropriate action to manage these obligations.
- Regulation 3.38 - Applications not considered
This regulation sets out that should the applicant not satisfy the requirements of regulation 3.35 (that is, if the applicant is an individual or a foreign person, or is not eligible to be the DOIP for the fuel in relation to which it is applying) then the Regulator must refuse to consider the application, or refuse to take an action or any further action in relation to the application.
If the Regulator decides to refuse to consider an application, then it must give written notice to the applicant within 14 days of making this decision.
- Regulation 3.39 - Request for further information or documents
Regulation 3.39 allows the Regulator to request further information from a person that has made an application to be a DOIP or to have its opt-in amount varied (through regulations 3.36 and 3.41, respectively). If the Regulator requires further information, then the applicant must provide the information within 14 days of the notification.
If the applicant fails to provide the information or documents requested within 14 days of the notice, then the Regulator may make a decision on the basis of the information that is available.
- Regulation 3.40 - Timeframes for declaration to be made
Regulation 3.40 sets out that the Regulator must take all reasonable steps to ensure that a declaration that a person is a DOIP is made within 90 days of the application being given to the Regulator or, where the Regulator has requested further information under regulation 3.39, within 90 days of that information being given.
Subdivision 7.4 - Variation to declaration of designated opt-in person
- Regulation 3.41 - Application to vary declaration in relation to opt-in amount
Regulation 3.41 allows a DOIP who is a representative member of a GST group to apply to the Regulator to have the DOIP's opt-in amount varied in relation to a member of the person's GST group that has left the GST group as a consequence of being sold or otherwise ceasing to meet the relationship requirements of a GST group. Specifically, the relationship requirement that must cease to be met is found in paragraph 48-10(1)(b) of the GST Act, namely that a person is no longer in the same '90 per cent owned group' as the other members of the GST group.
The intention of this variation is to allow a DOIP's liability to exclude any amounts acquired by a person who was member of its GST group and with which they no longer have a corporate relationship. This provides an exception to the 'locking' of GST groups for a full financial year, to account for a situation where it may be difficult for a DOIP to meet its liabilities in relation to a member of its GST group that has left.
This provision does not apply to members of a GST group that leave but continue to pass the relationship requirements of GST groups, as in such a situation it is expected that the DOIP will maintain a close relationship with the member.
An application for a variation under regulation 3.41 must be on a form approved by the Regulator and be given to the Regulator within 28 days of the member no longer satisfying the membership requirement.
- Regulation 3.42 - Variation to declaration
Regulation 3.42 allows the Regulator to vary the declaration in relation to a DOIP's opt-in amount by excluding the amount of any fuel acquired by a member of the GST group after the day mentioned in the variation, if the Regulator is satisfied that:
- the fuel of the member of the GST group was included in the DOIP's opt-in amount for the financial year in which the application for the variation is made; and
- the member of the GST group no longer satisfies the relationship requirement of being part of the same '90 per cent owned group' as all the other members of the GST group (paragraph 48-10(1)(b) of the GST Act).
If the Regulator decided to vary a declaration under this draft subregulation, the opt-in amount for the DOIP would be varied from the day mentioned in the variation until the end of the financial year in which the application for variation was made. The day mentioned in the variation may be a day before the declaration is made. This gives the Regulator discretion to vary a DOIP's opt-in amount from the day that is most appropriate.
Within 14 days of making a variation the Regulator must give a copy of the variation to the DOIP, the member of the GST group to which the variation relates (where relevant, see regulation 3.36(2)(b)(ii) and (iii)), the Commissioner for Taxation and the Chief Executive Officer of Customs.
Subdivision 7.5 - Designated opt-in person as liable entity
- Regulation 3.43 - Liability for emissions
Regulation 3.43 provides that a DOIP will be liable for the potential emissions embodied in its opt-in amount. The criteria for the liability of a DOIP are set out in section 92A of the Act. For clarity, these criteria are also set out in this regulation.
The DOIP's preliminary emissions number for a financial year is the potential greenhouse gas emissions embodied in the opt-in amount (in tonnes of CO2-e) if all of the following conditions are met:
- during an eligible financial year, a person acquired, manufactured or imported an amount of specified taxable fuel;
- an entity is entitled to a fuel tax credit in relation to that acquisition, manufacture or import;
- some or all of that amount of fuel is included in the DOIP's opt-in amount (noting that the DOIP's opt-in amount will include all specified taxable fuel acquired by the members of its GST group, participants in its GST joint venture, or by itself - see subregulation 3.37(2)); and
- the DOIP must pass the eligibility test in relation to the acquisition.
If the DOIP has one or more preliminary emissions numbers for an eligible financial year, then the sum of the preliminary emissions numbers is the DOIP's provisional emissions number for the eligible financial year, and the DOIP is a liable entity for that eligible financial year.
- Regulation 3.44 - Reduction of provisional emissions number
Regulation 3.44 allows the DOIP's provisional emissions number be reduced (but not below zero) by the potential greenhouse gas emissions, in CO2-e, embodied in the amount of specified taxable fuel that would have been subject to a carbon reduction of zero under sections 43-8(2)(b)-(d) of the Fuel Tax Act; or to which a carbon component rate under section 6FA or 6FB of the Excise Tariff Act does not apply.
This regulation ensures that a DOIP is not liable for fuel that is not subject to a carbon price. Without this regulation, the DOIP is liable for all specified taxable fuel that is included in its opt-in amount, and for which it is liable (regulation 3.43). This includes specified taxable fuel that is excluded from the carbon pricing mechanism - namely petrol and diesel used in the agricultural, forestry and fishing industries, and fuel used for heavy on-road transport. Regulation 3.44 removes fuel that is not otherwise subject to an equivalent carbon price from the fuel for which a DOIP is liable.
- Regulation 3.45 - Opting out of Scheme
Regulation 3.45 sets out the circumstances under which a DOIP may be opted out of the Opt-in Scheme. This regulation covers two situations: where a DOIP opts out voluntarily, and where the Regulator removes a DOIP from the Opt-in Scheme.
This regulation allows the Regulator to decide that a person is no longer a DOIP if the DOIP voluntarily opts-out by notifying the Regulator by 31 May of the financial year before the DOIP wishes to be opted-out. In such a case, the Regulator would make a declaration that the person is not opted-in from the end of the financial year, to take effect from 1 July of the next financial year.
Alternatively, the Regulator may opt out a DOIP from a date specified by the Regulator where:
- the person did not lodge a report in accordance with regulation 3.48, which sets out the annual reporting requirements for a DOIP; or
- the Regulator is not satisfied that for the financial year that the decision would have effect, that the person:
- meets the eligibility requirements (set out in regulation 3.34);
- passes the eligibility test at regulation 3.32;
- if the person were a DOIP for a GST group or GST joint venture, or itself and passed the threshold test by virtue of being a large fuel user (requirements for which are set out in regulation 3.34), then that the person, the GST group or the GST joint venture were not likely to use the threshold amount of fuel (25,000 of CO2-e);
- if the DOIP passed the threshold test under subregulation 3.34(1)(b)(i), (ii), (iv), or (v) by virtue of: being included on the LEPID, being a participant in a designated joint venture, or holding a liability transfer certificate, then that the DOIP was likely to be on the LEPID, apart from as a DOIP;
- if the DOIP passed the threshold test under subregulation 3.34(1)(b)(iii) by having operational control over a facility, then that the DOIP is likely to have operational control over a facility that will meet one of the threshold tests in Part 3, Division 2 of the Act;
- passed the eligibility test (set out in regulation 3.32) for the financial year the decision were to have effect; or
- an amount of unit shortfall charge payable for the DOIP remained unpaid for more than 30 days after it became due for payment; or
- the DOIP has become an externally-administered body corporate; or
- the DOIP has not provided the consent that is required through subregulation 3.47(2).
Where the Regulator has made a decision to remove a DOIP from the Opt-in Scheme, the person would be required to pay an equivalent carbon price through the fuel tax or excise system from the date that the Regulator specifies, rather than having their fuel acquisitions directly covered by the carbon pricing mechanism.
Within 14 days of making a decision, the Regulator must give a copy of the decision to the person that is no longer a DOIP, members of the DOIP's GST group or GST joint venture (where relevant, see subregulation 3.36(2)(b)(ii) and (iii)), the Commissioner for Taxation, and the Chief Executive Officer of Customs.
- Regulation 3.46 - Request for further information or documents for decision to opt-out of Scheme
Regulation 3.46 requires that before making a decision to opt-out a DOIP the Regulator may require a DOIP to provide further information or documents in relation to the opt-out within 14 days after the notice is given.
If a DOIP fails to provide the information or documents within 14 days of the notice, the Regulator may make a decision to opt out the person so that they are no longer a DOIP (under subregulation 3.45(1)(b)).
- Regulation 3.47 - Consent to be liable entity
Regulation 3.47 provides the circumstances when a person must provide consent, including a guarantee, to an applicant or DOIP's opt-in. The provision of consents and guarantees is in recognition of the reporting burden that a DOIP has in relation to fuel acquisitions by others, and facilitates the recovery of funds by the Regulator.
As such, at the time of application the following persons would have to provide consent for an applicant to be a DOIP:
- if the applicant were the representative member of a GST group - each member of the GST group of which the applicant is a member;
- if the applicant were the joint venture operator of a GST joint venture - each participant of the GST joint venture of which the applicant is an operator;
- if the applicant were a member of a GST group that is entitled to a fuel tax credit - the representative member of the GST group.
After a person has been declared a DOIP, this regulation also sets out when consent is needed from new members or participants in a DOIP's GST group or GST joint venture. When a member or participant joins the DOIP's GST group or GST joint venture, and the member or participant has not provided consent for the DOIP to be the DOIP for the GST group or GST joint venture then the new member or participant must provide consent, including a guarantee, before the end of the financial year in which the member or participant joined.
A person that were a member or participant and who provided consent for the DOIP to be the DOIP for the GST group, GST joint venture or GST group member is also taken to have provided a guarantee, for any financial year the person's fuel were included in the DOIP's opt-in amount. The guarantee extends to any the payment the DOIP may become liable for in relation to an amount of unit shortfall charge in relation to the provisional emissions number under the Opt-in Scheme and an amount that would be payable under section 135 of the Act because of the late payment of an amount of unit shortfall charge.
Each person who has provided consent is jointly and severally liable to pay the amounts mentioned above.
Subdivision 7.6 - Notification, reporting and record keeping requirements
- Regulation 3.48 - Reporting requirement
Regulation 3.48 requires that a DOIP provide a report to the Regulator by 14 July of each year. This annual report would the basis of a DOIP's opt-in amount for that financial year, and provides the Regulator with a list of the persons that will be included in the DOIP's opt-in amount.
The report must have the following information in relation to the current financial year (that is, the financial year in which the report is given):
- evidence that the DOIP meets the requirements set out in regulation 3.35 and passes the eligibility test for the financial year;
- the name of the entity that was entitled to a fuel tax credit in relation to the person's opt-in amount for the financial year (generally this will be the DOIP); and
- if the DOIP applied as a representative member or joint venture operator - the identifying information for the members of the GST group or the participants in the GST joint venture, at the start of the financial year, for which the DOIP would be liable.
The DOIP is not required to provide any documents to the Regulator that it has previously provided (see regulation 1.14 of the Principal Regulation).
- Regulation 3.49 - Record keeping requirement
Regulation 3.49 requires that a DOIP keep records of any information or document that is provided to the Regulator for the purposes of this Scheme for 5 years after the record were made.
- Regulation 3.50 - Fuel tax credit - notification of changes requirement
Regulation 3.50 establishes the notification requirements for the DOIP in relation to any significant changes or changes in its fuel tax credit arrangements for a financial year. A DOIP must notify the Regulator within 14 days of becoming aware that:
- the entity entitled to a fuel tax credit in relation to the opt-in amount for the DOIP has changed;
- if the DOIP applied as a representative member or joint venture operator - that the membership of the GST group or participants of the GST joint venture for which the DOIP were liable had changed - including where the DOIP were no longer the representative member or GST joint venture operator;
- the DOIP has gone into external administration; or
- the identifying information (see regulation 1.3 of the Principal Regulation).
Item [12] - After Part 4
Item [12] inserts a new Part 6 into the Principal Regulations.
Regulation 6.1 implements the Government's announced policy on international units that will not be accepted for surrender under the carbon pricing mechanism. This restriction is primarily to ensure only credible international units are used for compliance, supporting the environmental integrity of Australia's pollution reduction efforts.
The Minister has considered the matters described in subsection 123(2) of the Act. These matters are: Australia's international objectives; Australia's international obligations; the environmental integrity of the Act and its associated provisions; any relevant report given to the Minister by the Climate Change Authority under Part 22 of the Act; and the extent to which eligible international emissions units may be surrendered, accepted or used for the purpose of either the Climate Change Response Act 2002 of New Zealand, or the European Union Emissions Trading System (EU ETS).
The regulation prohibits the surrender of Certified Emission Reductions units (CERs) or Emission Reduction Units (ERUs) attributable to certain types of Kyoto Protocol Clean Development Mechanism (CDM) or Joint Implementation (JI) projects, described below.
CDM or JI projects involving either the destruction of trifluoromethane or nitrous oxide created as a result of producing adipic acid
Trifluoromethane (also known as HFC 23) is a gas used for refrigeration, fire suppression systems and other specialised manufacturing applications. It is a by-product of teflon manufacturing. Adipic acid is a substance that is primarily used to produce nylon. Nitrous oxide is released during the chemical reaction used to manufacture adipic acid.
In the international emissions trading compliance market, these types of projects are not regarded as generating units that have environmental integrity. Units from these industrial gas projects will not be accepted for surrender in the EU ETS after 30 April 2013. Certified Emissions Reductions from industrial gas projects are not currently accepted in New Zealand's emissions trading scheme.
CDM or JI projects for the production of nuclear energy
This regulation would align the Australia's surrender restrictions with the 2001 Marrakesh Accords, under which Annex 1 Parties to the Kyoto Protocol agreed to refrain from using international units generated from nuclear facilities to meet their emissions reduction commitments under the Kyoto Protocol.
CDM or JI projects for the production of hydropower with a generating capacity of greater than 20MW, unless the project meets criteria adopted by the European Union (EU)
In the international emissions trading compliance market, large scale hydro power projects (that is, those with a generating capacity greater than 20MW) are not generally regarded as generating units that have environmental integrity unless they meet specific criteria. For example, the EU ETS only accepts units from such a project for compliance in the EU ETS if a qualified independent entity has assessed that the project meets the seven strategic priorities outlined in the World Commission on Dams November 2000 Report Dams and Development - A New Framework for Decision-Making.
The effect of the regulation is that an independent validating entity accredited by the relevant supervisory bodies for the CDM and JI (a Designated Operational Entity or an Accredited Independent Entity, respectively) must have assessed the project that generated the CERs or ERUs as respecting (that is, meeting) those seven strategic priorities. If the assessment is not positive, the CERs or ERUs from the project will not be acceptable for surrender under the carbon pricing mechanism. A positive assessment against the strategic priorities will mean that all units issued from that project will be eligible for surrender under the carbon pricing mechanism.
The regulation requires the assessment to be in the form of an EU ETS compliance report, referred to as Annex 1 of the document Guidelines on a common understanding of Article 11b (6) of Directive 2003/87/EC as amended by Directive 2004/101/EC . The EU member states agreed that the compliance report would be used to assess such projects from 1 April 2009 in relation to the use of units generated by such projects under the EU ETS. Templates for the compliance report are available from either the European Union Commission website (http://ec.europa.eu/clima/policies/ets/linking/ji-cdm/docs/art11b6_comp_temp_en.pdf) or the Department of Climate Change and Energy Efficiency's website (http://www.climatechange.gov.au/~/media/government/initiatives/cdm/20120910-Compliance-report-template-PDF.pdf). The form of the documents is substantively the same.
Terms used in the operative sections of the regulation are defined in subregulation 3 of the Regulation.
Item [13] - For paragraph 14.1(1)(a)
Item [13] is a technical amendment that omits the word 'subsections' from subregulation regulation 14.1(a) and inserts the word 'provisions' in its place.
Item [14] - For subparagraph 14.1(1)(a)(vi)
Item [14] includes an application made under the Opt-in Scheme in the list of applications that a person is required to keep records in relation to. Where a person makes an Opt-in Scheme application, this regulation requires the person keep records of documents given to the Regulator for 5 years after the making of the record.
Item [15] - Before regulation 21.1
Item [15] inserts:
- 21.1A - Reviewable decisions-Opt-in Scheme
Regulation 21.1A provides that certain decisions made under the Opt-in Scheme are reviewable decisions. These decisions are:
- a decision under regulation 3.37 not to declare that a person is a DOIP;
- a decision under regulation 3.38 to refuse to consider an application;
- a decision under regulation 3.42 to refuse to vary a declaration made under regulation 3.37 in relation to the opt-in amount; and
- a decision under regulation 3.45 that a person is no longer a DOIP.
Item [16] - Schedule 1, after subclause 318 (5)
Item [16] includes an additional basis of allocation of free carbon units for the activity of printing and writing paper manufacturing. Subclause 318(5A) outlines that the basis for the issue of free carbon units is per total air dried tonne (assuming a 10 per cent moisture content) of equivalent pulp produced from recovered paper.
This sub-activity baseline of wet pulp production is only applicable where pulp is produced from recovered paper as part of the aforementioned printing and writing paper manufacturing activity.
To be eligible as a relevant product for the sub-activity of wet pulp manufacturing from recovered paper, the pulp must:
- be produced from recovered paper;
- be used in the integrated process of printing and writing paper manufacturing; and
- be produced as part of carrying on the EITE activity as defined by subclause 318(1).
For all pulp and paper activities, an amount of paper or pulp can only be used to calculate one allocation of free carbon units. For example, pulp produced from recovered paper cannot be counted towards an allocation of free carbon units under both printing and writing paper and newsprint activities.
Item [17] - Schedule 1, Part 3, after Division 47
Item [17] inserts the following Division:
Division 48 - Production of nickel
Clause 348
Clause 348 provides that the production of nickel is the chemical and physical transformation of either or both of: nickel bearing inputs into intermediate nickel products, primary nickel products or cobalt products; and intermediate nickel products into primary nickel products or cobalt products.
Production of nickel is an EITE activity eligible for assistance at the moderately emissions-intensive rate.
Each producer conducting the activity during the baseline period for assessing the eligibility of the activity used a different method to process mineralised nickel ores and low grade nickel waste products into primary nickel products. It is intended that all of the alternative processes used during the baseline period will fit within the activity description. In addition to the differing production methods used, not all producers conducted the entire activity. Some producers processed nickel ores and low grade nickel waste products to saleable intermediate products, some producers processed intermediate products to final nickel and cobalt products and some producers conducted the full process.
The activity does not include the upstream mining of mineralised nickel ores or the production of low grade nickel waste input products. Further, the activity does not include the downstream processing of the relevant products or the processing of any by-products from the production of integrated nickel or cobalt products, other than as specified in the activity.
Subclause 348(4) provides that there are four baselines relevant for the activity of the production of nickel:
- tonnes of 100 per cent equivalent nickel contained within primary nickel products produced from mineralised nickel ore or low grade nickel waste products;
- tonnes of 100 per cent equivalent nickel contained within nickel intermediate products produced from mineralised nickel ore or low grade nickel waste products, which are not subsequently transformed into primary nickel products by the applicant;
- tonnes of 100 per cent equivalent nickel contained within primary nickel products produced from nickel intermediate products not produced by the applicant; or
- tonnes of 100 per cent equivalent cobalt contained within cobalt products.
It is intended that all concentrations should be measured on a dry weight basis.
The inputs of this activity are nickel bearing inputs and intermediate nickel products. The outputs of this activity are intermediate nickel products, primary nickel products and cobalt products.
Subclause 348(5) sets out the meaning of "cobalt products", "intermediate nickel products", "nickel bearing inputs" and "primary nickel products".
Cobalt products are defined to mean cobalt hydroxide where the concentration of cobalt is equal to or greater than 65 per cent with respect to mass; and cobalt where the concentration of cobalt is equal to or greater than 99 per cent cobalt with respect to mass.
Intermediate nickel products are defined to mean:
- nickel matte, where the concentration of nickel is equal to or greater than 64 per cent nickel with respect to mass;
- mixed nickel-cobalt hydroxide precipitate, where the concentration of nickel is between 42 and 47 per cent (inclusive) with respect to mass;
- basic nickel carbonate, where the concentration of nickel is between 40 and 45 per cent (inclusive) with respect to mass; and
- nickel sulphide concentrate, where the concentration of nickel is between 11 and 29 per cent (inclusive) with respect to mass.
Nickel bearing inputs are defined to mean mineralised nickel ores (including laterite or sulphide) and low grade nickel waste products that require equivalent processing to mineralised nickel ores.
Primary nickel products are defined to mean:
- basic nickel carbonate, where the concentration of nickel is equal to or greater than 50 per cent nickel with respect to mass;
- nickel oxide, where the concentration of nickel is equal to or greater than 78 per cent nickel with respect to mass; and
- nickel, where the concentration of nickel is equal to or greater than 98 per cent nickel with respect to mass.
The nickel and cobalt products must have been produced by carrying on the activity (as defined in clause 348) to be eligible as relevant products.
The nickel or cobalt products must be of saleable quality. Outputs which are discarded or reprocessed because they do not meet output specifications are not of saleable quality.
Item [18] - Schedule 1, subclause 401 (1), table, item 1.12
Item [18] adds at item 1.12 in the table in Part 4 of Schedule 1 an additional electricity use allocative baseline for the production of air dried equivalent pulp from recovered paper as prescribed by item 18, which is categorised as a highly emissions-intensive activity. The allocative baselines for other elements of the production of the printing and writing paper activity do not change.
The baselines are for the direct emissions and electricity use for the activity in clause 318. The baselines have been established as the weighted industry average of the emissions and electricity intensity of the activity, based on data submitted by the entities undertaking the activity, consistent with the principles of the Program outlined in Establishing the eligibility of activities under the Jobs and Competitiveness Program.
The formula for calculating the number of free carbon units in Part 9 of Schedule 1 to the Regulation applies to the baselines as outlined in the table.
Item [19] - Schedule 1, subclause 401(1), table, after item 2.13
Item [19] inserts into the table in Part 4 of Schedule 1 allocative baselines for assistance that relate to the production of nickel as prescribed by Item [19], which is categorised as a moderately emissions-intensive activity.
The baselines are for the direct emissions and electricity use for the activity in clause 348. The baselines have been established as the weighted industry average of the emissions and electricity intensity of the activity, based on historical data submitted by the entities undertaking the activity during the baseline period, consistent with the principles of the Program outlined in Establishing the eligibility of activities under the Jobs and Competitiveness Program.
The formula for calculating the number of free carbon units in Part 9 of Schedule 1 to the Regulations applies to the baselines as outlined in the table.
Item [20] - Schedule 1, after Subclause 702 (1)
Item [20] inserts an amendment that provides for an extension to the deadline for the receipt of applications to the Regulator for assistance to entities undertaking the production of nickel activity described in Division 48 of Part 3. Applications may be given to the Regulator no later than 31 March 2013.
Item [21] - Schedule 1, Subclause 907 (13)
Item [21] inserts an amendment that provides for ethane-specific allocation factors. Eligible applicants conducting the ethene production activity described in Division 23 of Part 3 will receive assistance based on this ethane-specific allocation factor. To determine the relevant allocation, ethene output will be multiplied by the ethane-specific NGAFit and the NGPat baseline set out in Part 4.The meanings of NGAFit and NGPat are set out in subclauses 907(12) and 907(11) respectively.
These ethane-specific factors have been calculated based on the emissions intensity of the full ethane supply chain from the point of extraction to the point of delivery to customers, consistent with the methodology applied to determine the natural gas allocation factors.
The ethane-specific allocations factors are 21.5 carbon dioxide equivalent per terrajoule (tCO2-e/TJ) for New South Wales and 4.8 tCO2-e/TJ for Victoria.
It is intended that these new factors will apply for the 2012-13 financial year and onwards.
Item [22] - Schedule 1, Part 3, after Division 47
Item [22] inserts the following definition into subclause 907 (14):
ethane-specific factor means the factor worked out in relation to the emissions associated with the production and transmission of ethane.
SCHEDULE 2 - AMENDMENTS COMMENCING AFTER COMMENCEMENT OF CLEAN ENERGY AMENDMENT (INTERNATIONAL EMISSIONS TRADING AND OTHER MEASURES) ACT 2012
Items [1]-[3] - Regulation 3.32
Items [1] to [3] amend the eligibility test in regulation 3.32 to reflect amendments to section 92A(4) of the Act that are made in the Clean Energy Amendments (International Emissions Trading and Other Measures) Bill 2012. The amendments to the Act provide consistency and clarity for all GST joint ventures by including an explicit reference to GST joint venture operators as well as GST joint venture participants.
As the contents of section 92A(4) are replicated in the Regulation for the purposes of clarity, the amendment to the Act will also be incorporated into the Regulation. The amendment to regulation 3.32 takes effect on the later of the day after registration of the Regulation on the Federal Register of Legislative Instruments and the commencement of Schedule 1, Part 1 of the Clean Energy Amendment (International Emissions Trading and Other Measures) Act 2012.
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