Last Tuesday the Senate historically voted to pass the Clean
Energy Act 2011 and related legislation. As outlined in our
July publication, the carbon price mechanism (the Mechanism)
a 3 year fixed price phase from 1 July 2012, at $23 per tonne
(indexed 2.5% pa); and
a market-based price phase and emissions trading scheme
commencing 1 July 2015.
As passed, the Act contains changes made in the Lower House
since the draft Bills were first released in July. This update is
provided to assist you in understanding the key changes to the
package which could affect you as a participant in the construction
Joint venturers and facility operators
As in the draft Bills, where a facility is operated exclusively
on behalf of an unincorporated JV, the JV partners may voluntarily
assume direct liability for emissions as a "declared
designated joint venture".
More JVs may now benefit from this mechanism, including
one joint venture partner or more is a foreign person; or
the operator of the facility is one of the joint venture
The facility operator is no longer required to guarantee
payments by the JV partners. This requirement negated the benefit
of this mechanism for operators in the draft Bills. However,
liability can now revert to the operator if a JV partner fails to
make payment for more than three months.
Large users of taxable fuel
Under the draft legislation the Mechanism did not apply to
emissions from the combustion of transport fuels. From
1 July 2013, large users of liquid fuel will now have the option of
managing their own carbon liability directly under the Mechanism
instead of paying the equivalent carbon price through the fuel tax
system. The government has indicated that it will consult publicly
on this scheme.
Natural gas suppliers
The Mechanism now applies to "natural gas suppliers"
rather than "natural gas retailers". Suppliers are now
liable for emissions from natural gas when:
the natural gas has been withdrawn from a natural gas supply
pipeline to supply to a customer (other than large users with their
own direct liability);
it may reasonably be expected that the customer will consume
all or part of the gas; and
the customer does not quote an Obligation Transfer Number
There is now no reference to "transmission" and
"distribution" pipelines. Rather all "natural gas
supply pipelines" are covered unless specified by
Of interest to all industries generally, the Legislation
contains changes concerning:
disclosure of significant holdings of carbon units;
legal title to carbon units;
clean energy investment plans in the Energy Security Fund;
clarification of anti-avoidance provisions;
operation of an equivalent carbon price on synthetic greenhouse
the Clean Energy Regulator's registration and suspension
powers under the Renewable Energy Target; and
the functions and qualifications of the Land Sector
Biodiversity and Carbon Board.
With the Legislation to take effect on 1 July next year,
investment decisions should take into account more than just
capital costs. Projections of 'whole-of-life' costs need to
consider the annual changes during the fixed phase of the carbon
price and those associated with a fluctuating carbon price when the
system moves to a market based price in 2015.
Please contact us if you would like further details on any
aspect of the Clean Energy Legislation.
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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