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Monday, 17 August 2009
Page: 8069


Mr COMBET (Minister for Defence Personnel, Materiel and Science and Minister Assisting the Minister for Climate Change) (9:40 PM) —by leave—I present a supplementary explanatory memorandum to the bill and move government amendments (1) to (3):

(1)    Clause 2, page 2 (table item 3), omit the table item, substitute:

3.  Schedule 2

At the same time as the provision(s) covered by table item 2.

(2)    Schedule 2, item 2, page 7 (lines 14 to 16), omit the definition of emissions-intensive trade-exposed activity in subsection 5(1), substitute:

emissions-intensive trade-exposed activity means:

              (a)    if regulations are made for the purposes of subsection 167(1) of the Carbon Pollution Reduction Scheme Act 2009—an activity that is taken to be an emissions-intensive trade-exposed activity under the emissions-intensive trade-exposed assistance program; or

              (b)    otherwise—an activity prescribed by regulations made for the purposes of this paragraph.

(3)    Schedule 2, page 13 (after line 5), at the end of the Schedule, add:

22  Transitional regulations

The Governor-General may make regulations of a transitional nature relating to the transition from the application of paragraph (b) of the definition of emissions-intensive trade-exposed activity in subsection 5(1) of the Renewable Energy (Electricity) Act 2000 (as inserted by item 2 of this Schedule) to the application of paragraph (a) of the definition of that expression.

The government is committed to passing legislation to implement both the Carbon Pollution Reduction Scheme and the renewable energy target scheme as both are needed, as I have said in this place on a number of occasions, to tackle climate change effectively. However, in order to provide greater certainty, the government has decided to amend the renewable energy target legislation currently before the parliament to include interim assistance until the Carbon Pollution Reduction Scheme legislation is in place. The legislation currently aims to provide assistance under the renewable energy target to activities defined under the emissions-intensive trade-exposed assistance program in the CPRS legislation. This was in recognition of the cumulative cost impact of the renewable energy target scheme and the CPRS. However, in the absence of legislation implementing the CPRS, the scope and the basis for assistance under the RET has had to be reconsidered by the government. The cost impact of the renewable energy target alone, as I have said in my previous submissions in relation to this issue, is related to electricity intensity and is small for most industries. However, the renewable energy target will affect firms using a significant amount of electricity as part of their production processes and where international competition limits their ability to pass electricity cost increases on to their customers. Aluminium smelting, the subject of some discussion in the second reading debate in relation to the bills, is one such obvious activity.

This amendment therefore allows for interim renewable energy target assistance to be provided to those emissions-intensive trade-exposed activities that will be most significantly affected by electricity price increases from the RET, namely those which exceed an electricity threshold of 3,000 megawatt hours per $1 million of revenue or alternatively 9,000 megawatt hours per $1 million of value added. Eligible activities are likely to include aluminium smelting, silicon production and newsprint manufacturing. In the case of interim assistance, an exemption would apply for 90 per cent of the liability that relates to the expanded portion of the new annual targets—that is, the amount of the target that is above the 9,500 gigawatt hours which exists under the existing MRET.

Once the CPRS legislation and its enabling regulations do come into force, the partial legislated exemptions from the renewable energy target liability would be provided for all emissions-intensive trade-exposed activities as defined under the emissions-intensive trade-exposed assistance program in the CPRS legislation. An exemption would apply for either 90 per cent or 60 per cent of the expanded liability above the existing 9,500 gigawatt hour target, corresponding to whether an activity is determined to be highly emissions intensive or moderately emissions intensive under the CPRS. If the CPRS passes before 1 January 2010, these interim assistance arrangements will never come into force. The government remains committed to assisting all emissions-intensive trade-exposed activities to help manage the cumulative impact of the CPRS and the RET once both pieces of legislation are passed. The amendment appropriately targets assistance under the RET and will provide greater certainty to support investment in renewable energy generation. These provisions are to commence on the day, subject to passage through the parliament, on which the act receives royal assent, and I commend the amendments to the House.