With the release of the exposure draft of the Carbon Pollution
Reduction Scheme Bill 2009 we now get a clearer picture of the
Government's emissions trading proposal. While much of the
detail remains, of course, to future regulations, there are a
number of interesting developments:
Key elements have been confirmed:
The start date of 1 July 2010.
Australian Emission Units will be a form of personal
There is no statutory transitional mechanism for
"pass-through" of Scheme costs in commercial
The price cap of $40 per tonne of CO2-e (increasing at 5
percent per annum) is set out on a yearly basis in the legislation
(rather than being left to regulations).
There are two major liability transfer mechanisms - the complex
"obligation transfer number" mechanism for netting out
emissions for certain entities, and the transfer certificates
between controlling corporations and subsidiaries, and from
operational control entities to financial control entities.
Section 764A(1) of the Corporations Act 2001 (Cth) will be
amended to specify both an Australian emissions unit and an
eligible international emissions unit as a financial product.
The Regulator's powers are broad and include the power to
require security from scheme participants in certain circumstances.
The reforestation provisions include an additional level of
security for the Government which will be imposed on a forest right
holder (often the land owner), and the land on which a
reforestation project is located, if a relinquishment requirement
is not fulfilled.
A substantial amount of information is to be made publicly
available on the Scheme Registry or the Regulator's website,
including the quantity of EITE free units issued to particular
entities and notification of changes in a controlling
corporation's significant holdings of AEUs.
The definition of "person" under the legislation
includes a local governing body and body politic.
The Minister will issue auction policy, procedure and rules
until 1 January 2012, after which time the role will transfer to
And finally, there are significant criminal penalties in the
order of 10 years imprisonment or $1,100,000 for certain breaches
of the legislation relating to anti-avoidance schemes.
Although the draft legislation reflects the White and Green
papers, and therefore holds few surprises, it does open up a
further avenue for comment on the proposals and a chance to
influence the Scheme's final shape. Comment must be in by 5pm
(AEST) on Tuesday 14 April 2009, and we urge all stakeholders to
consider making a submission on key elements of the Scheme.
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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