Australia: Progress On The Carbon Pollution Reduction Scheme

Status Of The CPRS Legislation

The Carbon Pollution Reduction Scheme Bill 2009 (Cth) (the Bill) and associated Bills (the CPRS Bills) were passed by the House of Representatives on 4 June 2009. The Commentary issued with the CPRS Bill outlines the final design of the proposed Carbon Pollution Reduction Scheme (CPRS).

The Bill was subsequently introduced in the Senate but was then referred to the Senate Standing Committee on Economics and the Senate Select Committee on Climate Policy, whose respective reports have been released. It is anticipated that the Bill will be voted on in the Senate in August 2009.

On 19 June 2009 the Government released draft CPRS Regulations and commentary, outlining the details of the Emissions-Intensive Trade-Exposed (EITE) assistance program and calling for public comment. The deadline for submissions is 14 August 2009. The CPRS will be a 'cap and trade' scheme. An overall cap will be set on emissions from the covered sectors and an equivalent amount of Australian Emission Units (AEUs) made available to be traded and surrendered. The aim of the cap is to achieve the environmental outcome of limiting greenhouse gas emissions.

The CPRS will impose mandatory obligations on approximately 1,000 entities (liable entities). Liable entities will be required to surrender AEUs and eligible international units equivalent to their greenhouse gas emissions each year. Each unit allows the emission of one tonne of carbon dioxide equivalent of greenhouse gases (CO2-e). The Australian Climate Change Regulatory Authority will issue Australian emission units up to the national scheme cap each year.

The CPRS will have a one year fixed price period from its commencement on 1 July 2011. During this period an unlimited number of AEUs will be issued to liable entities at a cost of $10 per tonne of CO2-e, with the transition to full market trading from 1 July 2012.

The CPRS will apply to transport, stationary energy, fugitive emissions, industrial processes and waste. The forestry sector may opt-in and agriculture will not be covered until at least 2015.

Generally, a person will be liable under the CPRS if the person:

  • Operates a facility (landfill or non-landfill) that directly emits 25 kilotonnes or more of CO2-e a year. (The threshold is reduced to 10 kilotonnes of CO2-e for landfill facilities within a prescribed distance of another landfill facility that accepts waste of a similar classification).
  • Imports, produces or supplies certain upstream fuels, known as 'eligible upstream fuels'.
  • Imports, manufactures or supplies a synthetic greenhouse gas that leads to emissions of 25 kilotonnes or more of CO2-e a year.

On 4 March 2009, the Federal Government announced that the start date of the CPRS is to be delayed until 1 July 2011 to address industry's concerns about starting a trading scheme during a global recession.

Review Of The Environment Protection And Biodiversity Conservation Act 1999

An independent review of the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act) is being undertaken as required under section 522A of the EPBC Act. This provision requires that a review of the EPBC Act take place within 10 years of the Act's commencement (before 16 July 2010).

The review was initiated with the release of a discussion paper to encourage public comment. Two hundred and twelve submissions were received. A series of face to face consultations were then held between March and May this year in each capital city.

An interim report was released on 29 June. The Chairperson of the review, Dr Allan Hawke, has now called for public comment on the interim report.

The interim report indicates that the most common proposals from the public submissions involved the inclusion of 'triggers' within the EPBC Act for greenhouse gas emissions (or climate change impacts), land clearance, water extraction, wild rivers, wetlands of national importance and wilderness areas. Views varied as to the desirability or merit of various types of additional triggers.

Possible 'Carbon Trigger' – EPBC Act

As mentioned above, the Interim Report on the EPBC Act review has addressed proposals that a 'carbon trigger' be inserted into the Act. 'Green' groups understandably tended to support such a modification to the EPBC Act whereas interested industry groups generally opposed it.

Under the EPBC Act, any proposed action that may have a 'significant impact' upon a 'matter of national environmental significance' must be approved by the Federal Government before a proposed action can commence.

Currently, the EPBC Act specifies seven matters of national environmental significance, including world heritage properties, wetlands of international importance, migratory species and certain listed threatened or endangered species.

The courts have held in a number of cases that activities that result in the emission of very large volumes of greenhouse gases do not trigger the requirement that the activity be approved under the EPBC Act, despite an arguable significant potential impact on some matters of national environmental significance. For example, it was found that EPBC Act approval was not required for the Anvil Hill coal mine, even though the mine will produce enough coal that, when burnt, will increase global greenhouse gas emissions by 0.05%.

If a 'carbon trigger' were to be inserted into the EPBC Act, any proposed project that emitted large volumes of carbon dioxide would require approval by the Federal Government under the EPBC Act before implementation.

It is likely that any recommendation that a carbon trigger be introduced into the EPBC Act would limit it as an interim measure until the Carbon Pollution Reduction Scheme commences, as such a trigger would have the potential to distort the carbon market under an emissions trading scheme.

Review Of The National Biodiversity Strategy

The Natural Resource Management Ministerial Council recently invited public comment on the draft Australian Biodiversity Conservation Strategy 2010-2020. The period for comment expired on 29 May.

The strategy will guide governments, the community, industry and scientists in managing and protecting Australia's plants, animals and ecosystems over the next ten years.

The draft strategy has been developed collaboratively by the Commonwealth government and all State and Territory governments, with advice from the CSIRO and the Bureau of Meteorology. It will replace the National Strategy for the Conservation of Australia's Biological Diversity, which was agreed in 1996.

Changes To The National Polutant Inventory

The Environment Protection and Heritage Council have changed the reporting requirements of the National Pollutant Inventory (NPI). Changes are reflected in the National Pollutant amendments to the National Environment Protection (National Pollutant Inventory) Measure (NPI NEPM).

Changes to the requirements for reporting to the NPI include:

  • Reporting of transfers of NPI substances within waste to final destination (eg sewer, landfills, tailing dams).
  • Reporting on greenhouse gas emissions.
  • The addition of new substances to be reported on.
  • Lowering the threshold for mercury and compounds.
  • Voluntary reporting of transfers to re-use, recycling or re-processing destinations.

The variations came into effect on 26 November 2008 and were then subject to adoption in each jurisdiction.

National Greenhouse And Energy Reporting Act 2007 Compliance And Enforcement Policy

In June 2009, the Greenhouse and Energy Data Officer (GEDO) published its Compliance and Enforcement Policy for implementation of the National Greenhouse and Energy Reporting Act 2007 (Cth) (NGER Act). The purpose of the policy is to inform stakeholders about how the GEDO intends to manage compliance and enforcement with the NGER Act.

The NGER Act requires the reporting and public disclosure of greenhouse gas emissions, energy consumption and production by large corporations. The first reporting year under the NGER Act commenced on 1 July 2008.

The Compliance and Enforcement Policy outlines that the GEDO will employ a range of responses that escalate according to the severity of the contravention or if noncompliant activities continue.

Generally, warnings will be used in response to first and less serious contraventions.

However for serious or continuing contraventions, deterrent sanctions will be used that may include enforceable undertakings, pecuniary penalties and criminal prosecution.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.

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