The Clean Energy Legislative Package, contains a total of 14
Bills. The mechanism's aim is to ensure a clean energy future
and provide funding for renewable and low emission energy.
There are four primary Bills:
Clean Energy Bill 2011 which sets out a carbon price
and rules for who is covered
Clean Energy Regulator Bill 2011 which sets up a new
statutory body to administer the mechanism and enforce the
Climate Change Authority Bill 2011 which establishes
an independent body to advise the government on the mechanism and
climate change mitigation initiatives
Clean Energy (Consequential Amendments) Bill 2011
which ensures consequential amendments are made to support the
mechanism operations and functions.
Details of the carbon pricing mechanism can be found in our
Energy & Resources Group's
The opportunity to comment on the Clean Energy Legislative
Package is open until 22 August 2011 with the legislation likely to
be introduced to Parliament in September 2011. The legislation is
intended to take effect on 1 July 2012.
Prices and carbon tax related costs
Under the Legislative Package, around 500 of Australia's
biggest polluting businesses will be required to buy and surrender
a permit (initially priced at A$23) for every tonne of carbon
dioxide equivalent they emit. This additional "carbon
tax" related cost is likely to be passed on by these
businesses in the form of increased electricity prices, increased
gas prices and increased prices for other emission intensive
products (such as steel and aluminium).
The ability of businesses to pass on these carbon tax related
costs may depend upon the contractual terms governing:
the upstream supply of electricity, gas and emission intensive
the downstream supply of goods and services which may be
impacted by the increased cost of these inputs.
It will be important for businesses to accurately quantify and
record their carbon tax related costs in order to substantiate any
claims that their price increases are the result of those
Watchful eye of the Australian Competition and Consumer
The Clean Energy Regulator will have powers to disclose
protected information and receive information from other regulators
including the Australian Competition and Consumer Commission (ACCC)
and ASIC, and will work with these regulators to ensure businesses
comply with the competition and consumer laws and financial
services laws in complying with the mechanism.
The ACCC will be provided with additional funding of A$12.8
million over four years to investigate, monitor and control how
businesses work the carbon tax into their pricing structures and
representations to consumers.
This level of funding (when combined with the anticipated
exchange of information between the Clean Energy Regulator and the
ACCC) will mean that businesses will need to exercise caution in
making carbon tax related pricing claims and representations.
The ACCC will have powers to investigate and prosecute
businesses for making misleading carbon tax related pricing claims
and impose penalties of up to A$1.1 million. As part of this, the
Government has said it will direct the ACCC to give priority to
education, awareness and prosecution action to ensure businesses do
not make false or misleading statements or representations about
the impact of the carbon tax on the price they pass onto and charge
As the Government has maintained that the price impact of the
carbon tax on households will be minimal, the Government will be
keen to ensure the ACCC uses its powers to stop businesses:
from inflating prices above the level necessary to absorb the
carbon tax related costs
falsely claiming that price increases are due to the carbon
Accordingly, any carbon tax related pricing claims made by
businesses are expected to be scrutinised by the ACCC.
Businesses which propose to increase their prices to pass on
carbon tax related costs will need to:
accurately capture and record all carbon tax related costs in
order substantiate any carbon tax related price increases
review all pricing representations to ensure no false,
misleading or exaggerated claims are made about the impact of
carbon tax related costs on their pricing.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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This legal update is an overview of existing eligible project activities and new project types proposed to be developed.
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