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30th April 2012
By Satyapal Singh
Overview of Australian Carbon Price Mechanism
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Regional GHG reduction Schemes
The New South Wales Greenhouse Gas Abatement Scheme (NGAS), a carbon
trading scheme introduced by the New South Wales Government in 2003, toreduce greenhouse gas emissions associated with the production and use of
electricity
The Qld 13% Gas Scheme or GEC Scheme (see GEC) introduced by the Australian
State of Queensland, to increase the proportion of electricity generated using gas
A Victorian Renewable Energy Target (VRET) which, since 2006, has been working
at a state level to increase electricity generation from renewable energy sources to
10% by 2016
The Greenpower scheme, a national voluntary scheme which allows consumers to
purchase all or part of their electricity requirements from a renewable energy
source such as a wind or hydro-electric scheme
The Victorian Energy Efficiency Target (VEET) schemeto improve residential energy
efficiency
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Australia's Climate Change Plan
The Government committed to reduce CO2e emissions by at least 5% below 2000
levels by 2020 and by 80% by 2050
To achieve the above said target , Govt. has following key elements:
A carbon price (a tax and then trading)
Renewable energy target ($10bn Clean Energy Finance Corporation, $3.2bn
Australian Renewable Energy Agency, Energy Security Fund)
Action on the land (Carbon Farming Initiative)
Energy efficiency (Low Carbon Communities program)
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GHG Emission by Sector in calendar year 2011
Source: Department of climate change and energy efficiency, Australia
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Governance of Climate Change Issues
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Clean Energy Regulator (CER)
Clean EnergyRegulator
CPM CFI RET NGERS
CPM : Carbon Price Mechanism
CFI: Carbon Farming Initiative Scheme
RET: Renewable energy Target Scheme
NGERS : National Greenhouse and Energy Reporting Scheme
The CER is an independent statutory authority established by the Clean Energy
Regulator Act 2011The CER is the Government body responsible for administering legislation that
reduces carbon emissions and increase the use of clean energy
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The Responsibilities of the CER
Assessing emissions data to determine each emitting entity's liability
Operating an emissions unit registry
Monitoring, facilitating and enforcing compliance with the carbon pricing
mechanism
Allocating units, including freely allocated units, fixed price units and auctioned
units
Administering the CPM, NGERS, RET and CFI
accrediting auditors for the CFI, the Carbon Pricing Mechanism and the NGERS, and
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Carbon Pricing Mechanism (CPM)
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About Carbon Price Mechanism (CPM)
Carbon pricing is form of a carbon tax or environmental tax levied on the carbon
content of fuels
Carbon tax to be introduced from 1 July 2012
The CPM will start at a fixed price of $23 a tonne in 2012-13, and then transition to
a flexible market price under a cap and trade scheme in 2015-16
In both the fixed and the flexible price period, liable entities will have to pay a pricefor every tonne of carbon pollution or the equivalent amount of certain other
greenhouse gas that is emitted
Liable entities will be required to report on their emissions; liable entities can meet
their liabilities by either surrendering units to meet the obligation, or paying a unit
shortfall charge
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Carbon Pricing: PhaseI (Jul 2012-Jun 2015)
Cap and
Trade
Mechanism
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Sector covered under CPM
It targets around 500 largest polluters (electricity and manufacturing direct
emissions and coal/LNG fugitive emissions)
With minimum carbon emission of 25,000 tons annually covered under carbon tax
regime
It covers approximately 60% of Australias carbon emission
Excluded from carbon taxing and trading:
Agriculture,
Smaller industrials and
All households
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Sectoral Distribution of Liable Entities
Power, 60
Waste Disposal, 190Mining, 100
NG Retailers,
40
Industrial
Process, 50
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Emission excluded from Carbon Pricing
Emissions from agriculture
Emissions from transport fuels
Fugitive emissions from decommissioned underground coal mines legacy
Emissions from the operation of landfill facilities (i.e. arising from waste deposited
before 1 July 2012)
Certain emissions from landfill facilities that have not accepted any waste since the
start of 1 July 2012
Emissions of synthetic greenhouse gases, except for perfluorocarbons emitted as a
result of aluminium production, and emissions from biomass, biofuel and biogas.
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Liable Entities under the CPM
A direct emitter and
Supplying natural gas or using large quantities of natural gas; or
Both
Covered Emission for liable entities
Carbon dioxide (CO2); Methane (CH4);
Nitrous oxide (N2O); or
Per fluorocarbons specified in the NGER Regulations and that are attributable to
aluminum production
Scope 1 emission are only liable entities
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Liable Entities Responsibilities?
Reporting under the NGER Scheme
Emissions number
Surrendering emissions units
Acquiring and surrendering emissions units to account for your liability; or
Paying a unit shortfall charge for the amount of your liability that you do not meet by surrendering
units
Eligible emission units
Carbon units
ACCUs
International emissions units
Certified emission reductions
Removal Unit
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Carbon Instruments
Free permits
Australian Carbon Credit Units (ACCU)
Emission Reduction Unit ( ERU)
Certified Emission Reductions (CERs)
But CERs generated from following activities will not be accepted: Nuclear energy projects
Destruction of HFC-23 and N2O
Large scale hydro
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Paying Unit Shortfall Charge
The unit shortfall charge is a number representing the difference between your
total liability and the amount you actually surrendered
Penalty :
During the fixed price period 130 per cent of the fixed price payable for carbon units of the vintage of
the carbon units not surrendered; and
During the flexible price period either an amount specified in regulations, or 200 per cent of the
benchmark average auction charge for the previous financial year
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Carbon Farming Initiative
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What is Carbon Farming Initiative (CFI) ?
CFI is a legislated offsets scheme that allows farmers and land managers to earn
carbon credits by storing carbon or reducing greenhouse gas emissions on the land.These credits can then be sold to people and businesses wishing to offset their
emissions
The CFI covers land based activities that reduce or avoid GHG emissions and/or
increase carbon storage or sequestration. This includes activities such as:
Reduced methane emissions from livestock, manure management and landfill waste Reduced emissions from fertilizers, rice cultivation, avoided deforestation, forest management,
savannah burning and crop residue burning
Increased carbon sequestration through reforestation, revegetation and improved soil management.
The CFI commenced operation since December 2011
Participation in the CFI is voluntary - farmers and landholders can choose whether
or not to be involved
Credits generated under the CFI that are recognized for Australias obligations
under the Kyoto Protocol can be sold to companies with liabilities under the carbon
price mechanism
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How does CFI works?
Planning aCFI Project
Step -1
Apply toJoin the
CFI
Open aregistryaccount
Step- 2
Apply for aproject(EligibleOffset
project)
Step -3
Undertakeapproved
project
Step -4Submitoffsets
and auditreports
Step- 5
Apply forcredits
Step-6
Creditsissued
Step - 7
ProjectClosure
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Renewable Energy Target Scheme
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RET Scheme
Until 2 April 2012 under the Department of Climate Change and Energy Efficiency
now administered by CER
RET splits into two schemes
Large Scale Renewable Energy Target (LRET)
Small Scale Renewable Energy Scheme (SRES)
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Large-scale generation certificate (LGC) Market
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Small-scale technology certificate (STC) Market
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Thanks