Australia: Exposure Draft CPRS Regulations 2009

Last Updated: 30 November 2009
Article by Elisa de Wit

Following soon after the establishment of the Australian National Registry of Emissions Units (Registry) in preparation for the commencement of the Carbon Pollution Reduction Scheme (CPRS) (see our Legal Update: Let the Trading Begin!), the Government has released exposure draft Carbon Pollution Reduction Scheme Regulations 2009 (Regulations) which contain the detailed rules for the operation of the Registry and dealings with emissions units.

The Regulations, which would apply from the commencement of the CPRS legislation, build upon parts of the CPRS Bill by providing detail on a number of matters, including:

  • Proof of identity requirements for persons wishing to open Registry accounts;
  • Authorisation by account holders of persons able to operate Registry accounts on their behalf;
  • The process and requirements for transferring emissions units; and
  • Special rules relating to the holding, transfer and treatment of emissions units created under the Kyoto Protocol (Kyoto units).

Transfer of emissions units

The Registry is web-based and accordingly, the Regulations contain provisions to ensure the security and authenticity of electronic notices transmitted to the Australian Climate Change Regulatory Authority (Authority). An 'electronic notice transmitted to the Authority' is the means by which a person:

  • instructs the Authority to transfer emissions units from one account to another,
  • surrenders eligible emissions units to meet the person's liability under the CPRS;
  • voluntarily cancels or relinquishes emissions units; and
  • requests the Authority to cancel emissions units in return for the buy-back amount in the first, fixed-price year of the CPRS.

Emissions units will most commonly be assigned through an instruction issued by an account holder however the Regulations also deal with situations in which an account holder dies, an account holder becomes bankrupt or emissions units are transmitted as a result of a court order. Where there are other ways of dealing with a change in circumstances of the account holder, they are not dealt with in the Regulations. For example where a corporate body is wound up, a transmission can be dealt with through assignment before the body is wound up.

Certain information, including the holder of a Registry account and contact details of an account holder representative must be published on the Authority's website.

Kyoto units

A registered holder of a Kyoto unit may instruct the Authority to either transfer the unit within the Registry, known as a 'domestic transfer' or to transfer it to a foreign account, known as an 'outgoing international transfer'. All national registries under the Kyoto Protocol are linked by an international transaction log operated by the UNFCCC Secretariat, which verifies the validity of international Kyoto unit transfers and their conformity with the Kyoto rules.

The Regulations also set out the details of 'carry over' provisions. A Party under the Kyoto Protocol with an emission reduction target, such as Australia, may carry over (bank) certain Kyoto units to a subsequent commitment period. However the Kyoto rules stipulate limitations on the transfer of carry over units and the Regulations set out restrictions for Registry account holders so as to ensure Australia's compliance with its international obligations. The Government's policy is that each registered holder of relevant certified emissions reductions (CERs) and emissions reduction units (ERUs) (including the Government itself) will be allowed to carry over a proportion of units so that, in aggregate, no more than the allowable volume of CERs and ERUs is carried over. For example, if the total number of CERs in the Registry at the relevant time is twice Australia's allowable amount (i.e. 2.5% of Australia's initial assigned amount of 2,957,579,143 tonnes of CO2-e) each registered holder will be able to carry over half of its CERs.

Provisions dealing with the cancellation and replacement of temporary CERs and long-term CERs are also provided for in the Regulations, as well as restrictions on the transfer of Kyoto units to Commonwealth Registry accounts. For a more detailed explanation of the Kyoto units that can be used for compliance under the CPRS, see our Legal Update [insert link]


The Regulations provide that a Kyoto unit is personal property for the purpose of the Proceeds of Crime Act 2002 which will allows the Commonwealth to apply for restraining orders to effectively freeze the use of a Registry account where the Kyoto units in the account are the proceeds or instruments of crime.

The Regulations include obligations on account holders to notify the registry of a change to their address details and to notify the Registry if an emission unit has been transferred incorrectly into their account. Civil penalties apply for breach of these requirements and for misuse of the Registry.

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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Elisa de Wit
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