Commonwealth Numbered Regulations - Explanatory Statements

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RENEWABLE ENERGY (ELECTRICITY) AMENDMENT REGULATION 2012 (NO. 4) (SLI NO 101 OF 2012)

EXPLANATORY STATEMENT

Select Legislative Instrument 2012 No. 101

Issued by the Authority of the Minister for Climate Change and Energy Efficiency

Renewable Energy (Electricity) Act 2000

Renewable Energy (Electricity) Amendment Regulation 2012 (No. 4)

Section 161 of the Renewable Energy (Electricity) Act 2000 (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 establishes a Renewable Energy Target (RET) scheme to encourage additional electricity generation from eligible energy sources. The RET scheme is designed to ensure that 20 per cent of Australia's electricity supply is generated from renewable sources by 2020.

Under the Act, wholesale purchasers of electricity ('liable parties') must meet a share of the RET in proportion to their share of the national wholesale electricity market. The Act provides for the creation of Renewable Energy Certificates (RECs) by generators of renewable energy. One REC generally represents one megawatt-hour of electricity from eligible energy sources. Assistance is provided under the Act in the form of partial exemption certificates for electricity used in activities that are considered to be emissions-intensive and trade-exposed (EITE).

The Renewable Energy (Electricity) Amendment Regulation 2012 (No. 4) (the Regulation) amends the Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations) to support the provisions of the Act that deal with the provision of partial exemptions from liability in respect of the electricity acquired for use in carrying on EITE activities for the purposes of the Act.

The Regulation prescribes additional EITE activities that are eligible under the Act. These additional EITE activities are the production of glass beads, sodium silicate glass, polymer grade propene and rolled aluminium.

A Human Rights Statement in respect of the Regulation is included at Attachment A.

Details of the Regulation are set out in Attachment B.

The Act specifies no conditions that must be satisfied before the power to make the Regulation may be exercised.

The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulation commences on the day after it is registered on the Federal Register of Legislative Instruments.

 

Consultation

The Renewable Energy (Electricity) Amendment Regulation 2012 (No. 4) reflects the outcomes of comprehensive consultation by the Department with the public and stakeholders in assessing activities for eligibility as EITE activities primarily under the Jobs and Competitiveness Program (the Program). The eligibility requirements are the same for EITE activities under the RET scheme.

The Department of Climate Change and Energy Efficiency (the Department) commenced a formal process for defining and determining the eligibility of EITE activities in February 2009 and has involved stakeholder workshops to assist in the creation of appropriate definition and boundaries for activities. The process also involved the approval of activity definitions by the Minister for Climate Change and Energy Efficiency for the purposes of data collection and publication on the Department's website. Audited data has been submitted to the Government on the basis of the approved activity definitions. Relevant industries that submitted data to the Government for the formal assessment of respective activities were 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 generally.

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 defined to date under the Renewable Energy Target (RET) scheme under the Act. 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 (which is available from the Department's website www.climatechange.gov.au).

Authority:    Section 161 of the Renewable Energy
(Electricity) Act 2000

 


 

Attachment A

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Renewable Energy (Electricity) Amendment Regulation 2012 (No. 4)

This Legislative Instrument 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 Renewable Energy (Electricity) Amendment Regulation 2012 (No. 4)

The Renewable Energy (Electricity) Amendment Regulation 2012 (No. 4) (the Regulation) amends the existing Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations). The Principal Regulations provide an administrative framework to implement aspects of the Renewable Energy (Electricity) Act 2000 (the Act) to establish the Renewable Energy Target (RET) scheme, including in relation to power station accreditation, eligibility requirements for renewable energy sources, eligibility requirements for solar water heaters and small generation units, the calculation methods for determining the number of certificates and establish the eligibility of activities for partial exemption certificates.

The Regulation prescribes additional activities that are emissions-intensive trade-exposed activities for the purpose of eligibility for partial exemptions from liability under the RET scheme.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

 

Greg Combet

Minister for Climate Change and Energy Efficiency

 

 


Attachment B

Details of the proposed Renewable Energy (Electricity) Amendment Regulation 2012 (No. 4)

Section 1 - Name of Regulation

Section 1 provides that the title of the Regulation is the Renewable Energy (Electricity) Amendment Regulation 2012 (No. 4) (the Regulation).

Section 2 - Commencement

Section 2 provides that the Regulation commences on the day after it is registered on the Federal Register of Legislative Instruments.

Section 3 - Amendment of Renewable Energy (Electricity) Regulations 2001

Section 3 provides that the Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations) are amended as set out in Schedule 1.

Schedule 1 - Amendments

Item [1] - after subregulation 22X (1A)

Item 1 amends subregulation 22X(1A) to provide that applications for the 2012 calendar year only in respect of a new activity to be prescribed in the Regulations under Parts 40 to 43 of Schedule 6 may be made up until 31 July 2012. This is intended to provide extra time to applicants that are undertaking newly prescribed activities to prepare the application and meet audit requirements. If additional activities are assessed as eligible and are included in the regulation before 31 July 2012, it is intended that the extension in the application date would also apply, where this is practicable having regard to the timing of the regulation and the application.

The amendment also clarifies that applications in relation to activities that were prescribed in the Regulations under Parts 33 to 39, which were prescribed as eligible activities in February 2012, were required to be made by 30 April 2012. 

Applications in respect of EITE activities that have been prescribed in the regulations before 2012 were required to be lodged by 31 March 2012.

In subsequent years, applications concerning all EITE activities would need to be lodged before 31 March in the year to which the application relates.

Item [2] - Schedule 6, clause 703

Item 2 makes a minor adjustment to the electricity baseline in clause 703 for the chlorine gas and sodium hydroxide activity which is the basis for the calculation of partial exemption certificates in respect of undertaking the activity. The electricity baseline is increased from 2.63 megawatt-hours to 2.65 megawatt-hours per tonne of 100 per cent equivalent sodium hydroxide on a dry weight basis. This amendment reflects revisions to the electricity baseline for the activity based on additional data which affected the industry average intensity of electricity use by the activity.

Item [3] - Schedule 6, after Part 39

New parts are included in Schedule 6 of the Principal Regulations to add new EITE activities eligible for assistance under the Renewable Energy Target (RET) scheme:

-          Part 40 (Production of glass beads)

-          Part 41 (Production of sodium silicate glass)

-          Part 42 (Production of polymer grade propene)

-          Part 43 (Production of rolled aluminium)

Each part sets out a description of the EITE activity, the rate of assistance of the activity and the electricity baseline for each relevant product produced by undertaking each activity for the purpose of calculating a partial exemption from Large-scale Renewable Energy Target and Small-scale Renewable Energy Scheme liability for electricity used.

For all EITE activities, the assessment of eligibility was based on the operations of the activity in the baseline period July 2004 to December 2008. This is referred to as the period used to assess the eligibility of the activity in the descriptions of the activity outlined below.

Part 40 - Production of glass beads

Division 1 - Production of glass beads

Clause 716 - Production of glass beads

Clause 716 provides that the production of glass beads is the physical and chemical transformation of recycled materials (such as cullet) and/or silicon dioxide (SiO2, silica), sodium carbonate (Na2CO3, soda ash) and other raw materials through a crushing (of any relevant recycled materials), sieving and firing process into saleable solid spherical glass beads where the refractive index is greater than or equal to 1.50 and the size is smaller than 2 millimetres (mm).

The activity as conducted during the period used to assess the eligibility of the activity involved the onsite crushing, sieving and firing of recycled materials (such as cullet). It is intended that other production processes to produce glass beads, including the onsite sieving and firing of silicon dioxide, sodium carbonate and other raw materials, would be considered to fit within the activity definition.

The activity description is not satisfied through the undertaking of the extraction and crushing of silica, production of sodium carbonate soda ash and other raw materials.

The inputs of the activity have been defined to include recycled materials (such as cullet) and/or silica, soda ash and other raw materials.

The output of this activity is saleable glass beads. By-products of the activity include glass grains.

The activity does not include the upstream extraction or production of the input to the activity including the production of silica, crushing of silica, production of soda ash or sorting of cullet. The activity also does not include the downstream processing of glass beads (such as secondary coating). As such, the relevant facility is that where the glass beads are actually produced and does not extend to separate facilities which may conduct either extraction of silica, sorting of cullet, secondary processing or distribution of glass beads products but not the activity as described.

Division 2 - Classification of activity

Clause 717 - Classification of activity

Clause 717 provides that the production of glass beads is an EITE activity eligible for assistance at the highly emissions-intensive rate.

Division 3 - Electricity baseline for calculating partial exemption

Clause 718 - Electricity baseline for product

Clause 718 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption for the production of glass beads is 0.400 megawatt-hours (MWh) per tonne of solid glass beads on a dry weight basis that have a refractive index greater than or equal to 1.50 and are smaller than 2 mm where the product is produced by carrying out the activity (as described in clause 716) and is of saleable quality (as defined in Regulation 22C of the Principal Regulations).

The measurement of the relevant glass beads should be measured according to the accepted industry practice for production that conforms to AS/NZS 2009:2006 Glass beads for pavement-marking materials or other relevant industry standard.

Part 41 - Production of sodium silicate glass

Division 1 - Production of sodium silicate glass

Clause 719 - Production of sodium silicate glass

Clause 719 provides that the production of sodium silicate glass is the physical and chemical transformation of silicon dioxide (SiO2, silica), sodium carbonate (Na2CO3, soda ash) into saleable sodium silicate glass where the concentration of sodium silicate (Na2SiO3) is equal to or greater than 99 per cent with respect to mass.

The activity as conducted during the period used to assess the eligibility of the activity involved the mixing of high purity sand and soda ash in a high temperature furnace.

The inputs of the activity have been defined to include silica and soda ash.

The activity does not include the upstream extraction and crushing of silica, production of soda ash and other raw materials. The activity also does not include the downstream processing of sodium silicate glass, such as the production of sodium silicate liquid (water glass) or sodium silicate derivatives. As such, the relevant facility is that where the sodium silicate glass is actually produced and does not extend to separate facilities which may conduct either extraction of silica, sorting of cullet, secondary processing or distribution of sodium silicate glass products but not the activity as described.

Division 2 - Classification of activity

Clause 720 - Classification of activity

Clause 720 provides that the production of sodium silicate glass is an EITE activity eligible for assistance at the highly emissions-intensive rate.

Division 3 - Electricity baseline for calculating partial exemption

Clause 721 - Electricity baseline for product

Clause 721 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption in respect of the production of sodium silicate glass is 0.0205 megawatt-hours (MWh) per tonne of sodium silicate glass on a dry weight basis where the glass has a concentration of sodium silicate (Na2SiO3) equal to or greater than 99 per cent with respect to mass and where the product is produced by carrying out the activity (as described in clause 721) and is of saleable quality (as defined in Regulation 22C).

The measurement of the relevant sodium silicate glass should be measured according to the accepted industry practice for production that conforms to ISO 1686:1976 Sodium and potassium silicates for industrial use - Samples and methods of test - General, ISO 1689:1976 Sodium and potassium silicates for industrial use - Calculation of the ratio : silicon dioxide/sodium oxide or silicon dioxide/potassium oxide, and ISO 1690:1976 Sodium and potassium silicates for industrial use - Determination of silica content - Gravimetric method by insolubilization.

Part 42 - Production of polymer grade propene (polymer grade propylene)

Division 1 - Production of polymer grade propene (polymer grade propylene)

Clause 722 - Production of polymer grade propene (polymer grade propylene)

Clause 722 provides that the production of polymer grade propene is the physical transformation of hydrocarbons that have a concentration of propene (C3H6, propylene) between 45 per cent and 85 per cent with respect to mass (inclusive) to polymer grade propene (C3H6, polymer grade propylene) that has a concentration of propene (C3H6, propylene) greater than or equal to 98 per cent with respect to mass.

The activity as conducted during the period used to assess the eligibility of the activity involved the use of a splitter to produce polymer grade propylene from refinery grade propylene.

The activity description is not satisfied through the undertaking of upstream manufacture and preparation of the refinery grade propene (refinery grade propylene) input stream.

The inputs of the activity have been defined to include refinery grade propylene, bought-in steam, bought-in quench water, and bought-in electricity.

The output of this activity is saleable 100 per cent equivalent propene contained within polymer grade propene that has a concentration of propene greater than or equal to 98 per cent with respect to mass. By-products of the activity include liquefied petroleum gas (LPG).

The activity does not include the upstream manufacture and preparation of the refinery grade propene (refinery grade propylene) input stream. The activity also does not include the downstream processing of liquefied petroleum gas (LPG) and downstream processing of the polymer grade propene output proceeding the propane/propene splitting column including but not limited to the production of polypropylene. As such, the relevant facility is that where the polymer grade propylene is actually produced and does not extend to separate facilities which may conduct either the production of refinery grade propylene, secondary processing or distribution of polymer grade propylene products but not the activity as described.

Division 2 - Classification of activity

Clause 723 - Classification of activity

Clause 723 provides that the production of polymer grade propene is classified as a highly emissions-intensive activity.

Division 3 - Electricity baseline for calculating partial exemption

Clause 724  - Electricity baseline for product

Clause 724 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption for the production of polymer grade propene is 0.220 megawatt-hours (MWh) per tonne of 100 per cent equivalent propene (C3H6, propylene) contained within polymer grade propene (C3H6, propylene) that has a concentration of propene greater than or equal to 98 per cent with respect to mass produced by carrying on the activity (as defined by clause 723).

The measurement of the relevant polymer grade propylene should be measured according to the accepted industry practice for production that conforms to ASTM D2163 - 07 Standard Test Method for Determination of Hydrocarbons in Liquefied Petroleum (LP) Gases and Propane/Propene Mixtures by Gas Chromatography and ISO 7941:1988 Commercial propane and butane - Analysis by gas chromatography.

 

 

 

Part 43 - Production of rolled aluminium

Division 1 - Production of rolled aluminium

Clause 725 - Production of rolled aluminium

Clause 725 provides that the production of rolled aluminium is the physical and chemical transformation of primary aluminium metal and/or secondary aluminium metal with alloying metals into coiled aluminium sheet with a concentration of aluminium equal to or greater than 90 per cent by mass, and with a thickness equal to or less than 6 millimetres (mm).

The activity as conducted during the period used to assess the eligibility of the activity involved casting of primary aluminium into rolling ingots, and the hot and cold rolling of ingots into coiled aluminium sheet.

The activity description is not satisfied through the undertaking of mining of bauxite or refining of alumina or aluminium smelting.

The inputs of the activity have been defined to include both primary aluminium metal and secondary aluminium metal with alloying metals. The output of this activity is coiled aluminium sheet of saleable quality with a concentration of aluminium equal to or greater than 90 per cent by mass, and with a thickness equal to or less than 6 millimetres.

The activity does not include the production of primary aluminium metal. The activity also does not include melting or casting of secondary aluminium, or any further processing of aluminium metal beyond the activity boundary, including cleaning, coating or slitting of coiled aluminium, or additional rolling of aluminium coil to produce saleable aluminium foil with a thickness of 0.180 millimetres or less. As such, the relevant facility is a facility where the rolled aluminium is actually produced and does not extend to separate facilities which may conduct either alumina refining or aluminium smelting, or secondary processing or distribution of rolled aluminium products but not the activity as described.

Division 2 - Classification of activity

Clause 726 - Classification of activity

Clause 726 provides that the production of rolled aluminium is classified as a highly emissions-intensive activity.

Division 3 - Electricity baseline for calculating partial exemption

Clause 727 - Electricity baseline for product

Clause 727 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption for the production of rolled aluminium is 0.982 megawatt-hours (MWh) per tonne of coiled aluminium sheet of saleable quality with a concentration of aluminium equal to or greater than 90 per cent by mass, and with a thickness equal to or less than 6 millimetres.

To be eligible for assistance, the rolled aluminium must have been produced by carrying on the activity (as defined by clause 725) to be eligible as a relevant product and must be of saleable quality (as defined by regulation 22C). In particular, the tonnes of rolled aluminium which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.


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