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Monday, 7 November 2011
Page: 8429


Senator XENOPHON ( South Australia ) ( 21: 42 ): By leave—I move amendments (4), (10) to (14) and (29) on sheet 7165 together:

(4)   Clause 5, page 12 (after line 31), after the definition of director, insert:

electricity generation benchmark scheme means the scheme under subsection 181D(1).

(10)   Clause 93, page 127 (after line 14), after paragraph (a), insert:

(aa)   the total number of free carbon units issued in accordance with the electricity generation benchmark scheme; and

(11)   Clause 99, page 129 (after line 5), after paragraph (b), insert:

(ba)   in accordance with the electricity generation benchmark scheme; or

(12)   Clause 102, page 135 (after line 22), after paragraph (1)(a), insert:

(aa)   the total number of free carbon units with that vintage year issued in accordance with the electricity generation benchmark scheme; and

(13)   Clause 115, page 152 (after line 5), before subparagraph (1)(a)(i), insert:

(ia)   in accordance with the electricity generation benchmark scheme; or

(14)   Clause 116, page 152 (after line 24), before subparagraph (1)(a)(i), insert:

(ia)   in accordance with the electricity generation benchmark scheme; or

(29)   Page 241 (after line 15), after Part 8, insert:

Part 8A—Electricity generation benchmark scheme

Division 1—Introduction

181B Aim and objects

(1)   The aim of this Part is to create incentives for the electricity generation sector in Australia to reduce emissions.

(2)   The objects of this Part are:

   (a)   to create incentives for abatement of emissions while mitigating the price impact of electricity wholesale prices on users; and

   (b)   to ensure that any increase in energy costs is a gradual increase for all users; and

   (c)   to promote lower emissions and improved price signals in relation to electricity generation; and

   (d)   to provide orderly transitional arrangements in respect of all electricity generated in Australia until 2030.

181C Simplified outline

      The following is a simplified outline of this Part:

The regulations must formulate a scheme, to be known as the electricity generation benchmark scheme, for the issue of free carbon units in respect of all electricity generated in Australia.

The electricity generation benchmark scheme may:

   (a)   require a recipient of free carbon units to relinquish units; and

   (b)   impose reporting or record-keeping requirements on a recipient of free carbon units.

Division 2—Formulation of the electricity generation benchmark scheme

181D Electricity generation benchmark scheme

(1)   The regulations must formulate a scheme (to be known as the electricity generation benchmark scheme) for the issue of free carbon units in respect of all electricity generated in Australia.

(2)   For the purposes of regulations made under subsection (1), the allocation of free units to electricity generators under the scheme for a year is the product of:

   (a)   the electricity production for the year; and

   (b)    the electricity generation allocation factor for the year;

      where:

electricity production for the year means the total number of megawatt hours of electricity generated by the generation unit in the financial year.

electricity generation allocation factor for a year means the amount specified in the following table for the financial year:

For the financial year beginning…

Electricity generation allocation factor is

1 July 2013

0.79

1 July 2014

0.76

1 July 2015

0.73

1 July 2016

0.70

1 July 2017

0.67

1 July 2018

0.63

1 July 2019

0.60

1 July 2020

0.57

1 July 2021

0.54

1 July 2022

0.51

1 July 2023

0.47

1 July 2024

0.44

1 July 2025

0.41

1 July 2026

0.38

1 July 2027

0.35

1 July 2028

0.31

1 July 2029

0.28

1 July 2030

0.25

   (3)   The electricity generation benchmark scheme must provide that free carbon units must not be issued to a person in accordance with the scheme unless the person:

   (a)   meets such requirements as are specified in the scheme; and

   (b)   has a Registry account.

(4)   The Minister must take all reasonable steps to ensure that regulations are made for the purposes of subsection (1) before 1 July 2013.

181E Relinquishment requirement

(1)   The electricity generation benchmark scheme may provide that, if:

   (a)   a number of free carbon units have been issued to a person in accordance with the scheme; and

   (b)   any of the following subparagraphs applies:

      (i)   a specified event happens;

      (ii)   a specified circumstance comes into existence;

      (iii)   the Regulator is satisfied about a specified matter;

the person is required to relinquish a number of carbon units ascertained in accordance with the scheme.

(2)   Part 11 relating to compliance with relinquishment of carbon units applies in relation to the scheme as if a reference to the Jobs and Competitiveness Program was a reference to the electricity generation benchmark scheme.

(3)   The number of carbon units required to be relinquished by the person must not exceed the number of units mentioned in paragraph (1)(a).

181F Reporting requirement

Scope

(1)   This section applies to a person if free carbon units have been issued to the person in accordance with the electricity generation benchmark scheme.

Requirement

(2)   The electricity generation benchmark scheme may make provision for and in relation to requiring the person to give one or more written reports to the Regulator.

181G Record-keeping requirement

Scope

(1)   This section applies to a person if free carbon units have been issued to the person in accordance with the electricity generation benchmark scheme.

Requirement

(2)   The electricity generation benchmark scheme may make provision for and in relation to requiring the person to:

   (a)   make records of information specified in the scheme; and

   (b)   retain such a record, or a copy, for 5 years after the record was made.

181H Other matters

(1)   The electricity generation benchmark scheme may make provision for and in relation to the following matters:

   (a)   applications for free carbon units;

   (b)   the approval by the Regulator of a form for such an application;

   (c)   information that must accompany such an application;

   (d)   documents that must accompany such an application;

   (e)   the method of calculating the number of free carbon units to be issued to a person in accordance with the scheme.

(2)   The electricity generation benchmark scheme may provide that an application for free carbon units must be accompanied by a prescribed report.

(3)   The electricity generation benchmark scheme may provide for verification by statutory declaration of statements in applications for free carbon units.

181J Ancillary or incidental provisions

      The electricity generation benchmark scheme may contain ancillary or incidental provisions.

Division 3—Compliance with reporting and record-keeping requirements under the electricity generation benchmark scheme

181K Compliance with reporting and record-keeping requirements

Reporting requirements

(1)   If a person is subject to a requirement under the electricity generation benchmark scheme to give a report to the Regulator, the person must comply with that requirement.

Record-keeping requirements

(2)   If a person is subject to a requirement under the electricity generation benchmark scheme to:

   (a)   make a record of information; or

   (b)   retain such a record or a copy;

the person must comply with that requirement.

Ancillary contraventions

(3)   A person must not:

   (a)   aid, abet, counsel or procure a contravention of subsection (1) or (2); or

   (b)   induce, whether by threats or promises or otherwise, a contravention of subsection (1) or (2); or

   (c)   be in any way, directly or indirectly, knowingly concerned in, or party to, a contravention of subsection (1) or (2); or

   (d)   conspire with others to effect a contravention of subsection (1) or (2).

Civil penalty provisions

(4)   Subsections (1), (2) and (3) are civil penalty provisions.

Note:   Part 17 provides for pecuniary penalties for breaches of civil penalty provisions.

I will briefly discuss these amendments. It was touched upon in the debate earlier—Senator Wong is quite correct in relation to that—that these amendments establish an electricity generation benchmark scheme designed to provide incentives to electricity generators to reduce emissions. The purpose of the scheme is to create incentives for the electricity generation sector to reduce emissions and they will not result in the price rises that will occur under the government's carbon price scheme—price rises that small businesses and medium businesses will not be compensated for. The big end of town, the emissions-intensive trade-exposed industries, will be compensated but not the small and medium business sector.

Under these amendments there are provisions for a number of free units to be allocated each year and also for a formula to reduce the number of permits issued under a benchmark for each year until 2030—a formula that has been modelled by Frontier Economics, a formula that has been subject to robust scrutiny and analysis. The implication of this benchmark is that it will preserve the incentives for all generators to reduce emissions, it will reduce the average cost to consumers and it will provide for a smoother transition to an emissions trading scheme, which the government has indicated it will do in three years time.

The final part of these amendments detail various requirements in compliance provi­sions for the operation of the scheme. In effect, an electricity generation benchmark scheme will bring the government's legisla­tion in line with the Frontier Economics intensity based scheme. The allocation of a number of free units each year and the use of a formula to reduce the number of permits issued under a benchmark for each year until 2030 will encourage the electricity sector to reduce their emissions without substantially increasing energy prices to consumers. That is the key. If you want to do this, do it in a way that will smooth out the transition and reduce the price shocks. You will still get there in the end, but you will actually get to a deeper target. That is what this amendment is about. It is about a smarter policy—a policy that the coalition was at least interested in back in 2009. That is the substance of this amendment.