Australian Regulatory Compliance Review

Garnaut Climate Change Review Final Report

The Garnaut Climate Change Review has released its Final Report.

The report provides recommendations on the policy options for Australia to most effectively respond to climate change.

The report recommends that the emissions trading system should be established at the earliest possible date, in 2010.

Supplementary Draft Climate Change Report released

The Garnaut Climate Change Review Supplementary Draft Report Targets and trajectories was released on 5 September 2008. The Final Report is due by 30 September 2008.

Report author Professor Garnaut proposes a 10 per cent reduction in emissions (or 30 per cent in per capita terms) by 2020 and an 80 per cent reduction (90 per cent per capita) by 2050 over 2000 levels.

The Carbon Disclosure Project

Carbon pollution reduction begins with with identifying and measuring carbon data and how to manage carbon. So the Carbon Disclosure Project by leading UK companies and IBM is of interest.

The Project has released a Best Practice Guide (pdf) to provide advice on how to successfully devise a corporate climate management response.

Carbon pollution permits to be Australian financial products

A carbon pollution permit (which will be referred to in legislation as an Australian emissions unit) would be an entitlement composed of various ‘rights’ contained in the carbon pollution reduction legislation. The main rights would be the right to surrender the permit and to transfer it.

A permit could be held and traded by any legal or natural person (subject to verification of identity and measures to prevent criminal activity).

Section 3.3.4 of The Carbon Pollution Reduction Scheme Green Paper discusses whether services provided in relation to permits would be similar to those for financial products such as shares and debentures. Those services include the provision of trading advice, brokerage services, and trading platform and support services.

Permits, like other financial products, could also be the subject of market misconduct, including market manipulation and insider trading.

The government's preferred position is that permits would be a financial product for the purposes of the Corporations Act, but some adjustment to that regime may be required to fit the characteristics of permits. Service providers would be required to hold an Australian financial services licence.

Government releases its Green Paper on the Carbon Pollution Reduction Scheme

The Government has released its Green Paper on the Carbon Pollution Reduction Scheme containing options and preferred approaches on issues, such as which industry sectors will be covered by emissions permits and how emission caps will be set. It also includes ways to address the impacts on Australian households, emissions-intensive trade-exposed industries and other strongly affected sectors.

Minister for Climate Change and Water, Senator Penny Wong, said“At the heart of the Carbon Pollution Reduction Scheme is emissions trading, in which the Government sets a limit on how much carbon pollution industry can produce, and then the Government sells permits up to that limit, creating an incentive to look for cleaner energy options.

“Companies can buy and sell permits from each other depending on how much they value them, thereby enabling the market to find the most efficient ways to reduce carbon pollution.”

The Government intends to implement the Carbon Pollution Reduction Scheme in 2010.

The Carbon Pollution Reduction Scheme will cover stationary energy, transport, fugitive emissions, industrial processes, waste and forestry sectors, and all six greenhouse gases counted under the Kyoto Protocol from the time the scheme begins.

To offset the initial price impact on fuel associated with the introduction of the Carbon Pollution Reduction Scheme, the Government will cut fuel taxes on a cent for cent basis over a 3 year period.

For heavy vehicle road users, who transport goods across the country, fuel taxes will be cut on a cent-for-cent basis to offset the initial price impact on fuel associated with the impact of the Carbon Pollution Reduction Scheme. The Government will review this measure after one year.

To assist rural and regional areas, the Government will provide a rebate equivalent to the excise cut for businesses in the agricultural and fishing industries for three years.

The Government will increase payments, above automatic indexation, to people in receipt of pensioner, carer, senior and allowance benefits and to provide other assistance to meet the overall increase in the cost of living flowing from the scheme.

The Government will establish the Climate Change Action Fund (CCAF) to help business transition to a cleaner economy, by providing in partnership funding for a range of activities, including:

The Government will provide transitional assistance in the form of a share of free permits to the most emissions intensive trade exposed activities.

The Government also proposes to provide a limited amount of direct assistance to existing coal-fired electricity generators.

Garnaut Climate Change Review Draft Report

The Garnaut Review has released its Draft Report .

The Draft Report provides the Review’s suggestions on the design of the emissions trading scheme and the emissions permits process (Chapter 15).

The draft Report will be discussed at public forums before the Final Report is issued at the end of September 2008.

National Greenhouse and Energy Reporting System Regulations

From next Tuesday (1 July), businesses emitting large amounts of greenhouse gases will be required to monitor and measure the emissions ahead of reporting them to the Government by 31 October 2009.

The National Greenhouse and Energy Reporting Regulations 2008 have been released.

From 1 July, corporate groups that emit 125 kilotonnes or more of greenhouse gases each year, or produce or consume 500 terajoules or more of energy, will be required to collect data to meet annual reporting requirements. Corporations controlling facilities that emit more than 25 kilotonnes of greenhouse gases, or use or produce 100 terajoules or more of energy, will also need to collect data.

While the National Greenhouse and Energy Reporting Act 2007 comes into effect on 1 July 2008, relevant corporations will have until 31 August 2009 to apply to register under the scheme, and until 31 October 2009 to submit their first annual greenhouse and energy report.

The Department of Climate Change has developed an online calculator to help businesses work out whether the system applies to them.

Energy reporting streamlining

The Minister for Resources, Energy and Tourism, the Hon Martin Ferguson AM MP and the Minister for Climate Change, Senator the Hon Penny Wong have announced a review of the Energy Efficiency Opportunities Regulations 2006 . Proposed amendments aim to better streamline energy use reporting with the Australian Government's new National Greenhouse and Energy Reporting (NGER) System.

Amendments to the EEO Regulations will make it easier for EEO member companies to collect and report one set of energy use data, reducing potential duplication.

Most companies will not be affected by the changes. However, for those companies that may have different sets of energy use under each scheme, the amendments will

• reduce the compliance burden; and
• avoid duplicative reporting requirements

The amendments are intended to commence on 1 July 2008, to coincide with the commencement of the NGER System.

Garnaut Review climate change update

The Garnaut Review's draft report will be released by 30 June 2008,

The interim report, issues papers and background and discussion papers can be found here.

Emissions Trading Scheme Discussion Paper

The Garnaut Climate Change Review has released a discussion paper putting forward for community discussion a set of principles and design features for the delivery of an efficient and effective Emissions Trading Scheme (ETS).

An ETS has two types of design features: those that are essential to the operational efficiency of the scheme, referred to as intrinsic features, (for example the scheme’s coverage, permit allocation rules, compliance rules and governance); and those that are defined outside of the scheme’s operation, but still have considerable influence on the scheme’s economic impact, referred to as extrinsic features (for example, defining the emissions limits and principles for compensation).

Submissions on the discussion paper are open until 18 April 2008.