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Carbon Pollution Reduction Scheme Bill 2009 [No. 2]

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6022

2008-2009

 

The Parliament of the

Commonwealth of Australia

 

THE SENATE

 

 

 

 

 

Carbon Pollution Reduction Scheme Bill 2009 [No. 2]

 

 

(1)     Page 214 (after line 3), at the end of Part 8, add:

Division 5—Modified formula for activities using a different type of feedstock

173D  Requirements for the emissions-intensive trade-exposed assistance program

                   The emissions-intensive trade-exposed assistance program must provide that a modified formula apply for the issue of free Australian emission units in respect of a facility that engages in an activity that is within a minority group in an industry based on the type of feedstock it uses, in accordance with this Division.

173E  Interpretation

                   In this Division:

general EITE formula means the formula for working out the number of free Australian emissions units to be issued to an applicant in respect of an emissions-intensive trade-exposed activity carried on during a specified period.

173F  Application

             (1)  The applicant may apply to the Authority:

                     (a)  for a facility existing before 1 January 2011, no later than 1 July 2011; or

                     (b)  for a facility which comes into existence on or after 1 January 2011, within 6 months of the commencement of construction of the facility;

for the Authority to issue a certificate (a varied feedstock certificate ) modifying the general EITE formula for:

                     (c)  the facility specified in the certificate; and

                     (d)  the emissions-intensive trade-exposed activity carried on at the facility.

             (2)  The application must be accompanied by:

                     (a)  a statement of the definition of the activity in respect of which the application is made, including details of:

                              (i)  a description of the defined activity; and

                             (ii)  exclusions such as sub-activities or elements of production; and

                            (iii)  any other information requested by the Authority;

                     (b)  a statement, evidence and details of the type of feedstock the applicant activity uses;

                     (c)  a statement of the type of feedstock the rest of the entities carrying out the same activity as the applicant activity use;

                     (d)  a statement evidencing that the applicant’s activity is within a minority group based on the type of feedstock it uses. For this purpose, the facility forms part of a minority if:

                              (i)  less than 20% of the total participants undertaking the same defined activity in Australia as the applicant are using an alternative feedstock to natural gas; or

                             (ii)  less than 50% of the total participants in Australia, but no more than 3 participants, undertaking the same defined activity as the applicant use an alternative feedstock to natural gas,

                     (e)  international evidence on the weighted average emissions per unit of production, pricing and trade across all of the possible feedstock types used in relation to the applicant’s activity, including natural gas feedstock;

                      (f)  in relation to paragraph (e), a statement from an independent expert specifying:

                              (i)  the scale and scope of international data available; and

                             (ii)  how representative the evidence in paragraph (e) is of world production for that activity; and

                            (iii)  the consistency of data with the activity definitions; and

                            (iv)  the existence of knowledge gaps in the evidence and information; and

                             (v)  the existence of other evidence and information which may be useful in determining the efficiency of Australian producers with that of international counterparts, including information relating to energy or electricity intensity;

                     (g)  Australian evidence from an independent expert on the emissions per unit of production, pricing and trade of the applicant’s type of feedstock for its activity;

                     (h)  a statement evidencing that a Department of Climate Change registered assurance provider has been engaged;

                      (i)  an explanation of how the modification, if permitted, will impact upon the applicant;

                      (j)  an explanation of how the modification, if permitted, will impact upon the general EITE formula;

                     (k)  a statement of what the baseline level of direct emissions per unit for the production of the relevant product should be and the calculations from which it was derived; and

                      (l)  a statement evidencing that the baseline level of direct emissions in paragraph (k) will meet the expected carbon cost exposure of that feedstock.

             (3)  The Authority must:

                     (a)  prepare a draft varied feedstock certificate in respect of the applicant’s facility, which sets out a new baseline level of direct emissions per unit which reflects the weighted average emissions per unit across all of the possible feedstock types in relation to the applicant’s activity; and

                     (b)  give a copy of the draft certificate to the applicant; and

                     (c)  notify the applicant, in writing, of the reasons why it has prepared the draft certificate; and

                     (d)  invite the applicant to comment about the draft certificate within 30 days after the date of the invitation.

             (4)  The invitation is not an undertaking or guarantee that the Authority will make a particular decision on the application.

             (5)  If, after considering any comments about the draft certificate received in accordance with subsection (3), the Authority is satisfied that it is appropriate to issue a varied feedstock certificate, the Authority must issue a certificate which sets out, in respect of the applicant’s facility, a new baseline level of direct emissions per unit.

             (6)  On issuing the varied feedstock certificate under subsection (5), the Authority must also notify each member of the minority to which the varied feedstock certificate relates that the new baseline level of direct emissions per unit of production applies to each member of minority.

[modified formula because of different type of feedstock]

(2)     Page 214 (after line 3), at the end of Part 8, add:

Division 6 Issue of additional free Australian emissions units in respect of c arbon capture and storage

173G  Object of Division

                   The object of this Division is to provide financial incentives for early investment in carbon capture and storage plant and equipment in relation to eligible assets. It does so by providing limited transitional assistance in respect of investment in carbon capture and storage plant and equipment in relation to eligible assets during the period up to and including the financial year 2024-25.

173H  Interpretation

                   In this Division:

carbon capture and compression means the capture, compression and, where necessary, conditioning of emissions, prior the transportation of emissions to a storage site capable of capturing and compressing emissions which are at least:

                     (a)  99% pure carbon dioxide; and

                     (b)  1.0 barg.

carbon capture and storage project means a project to construct and commission new carbon capture and compression equipment. For this purpose, it is immaterial whether the project has been completed.

carbon capture and storage ready assistance means assistance under this Division.

coal gasification means a manufacturing process that converts coal to a synthesis gas (syngas, which is mainly carbon monoxide and hydrogen), which can be further processed to produce chemicals, fertilizers, liquid fuels, hydrogen, and electricity; coal gasification is not combustion, but rather partial oxidation, meaning limited oxidant is added.

EITE emission units , in respect of a facility, means the number of free Australian emissions units issued to a person in respect of the facility under the provisions of the emissions-intensive trade-exposed assistance program, other than this Division.

173I  Issue of free Australian emissions units in respect of c arbon capture and storage

             (1)  The emissions-intensive trade-exposed assistance program must provide for the issue of free Australian emissions units ( CCSR units ) in respect of a facility that:

                     (a)  undertakes emissions-intensive trade-exposed activities; and

                     (b)  uses coal gasification technology; and

                     (c)  is controlled or operated by persons that have invested, or stand ready to invest, in carbon capture and storage ready plant and equipment.

             (2)  CCSR units must not be issued to a person under this Division unless the person:

                     (a)  meets such requirements as are specified in the emissions-intensive trade-exposed assistance program; and

                     (b)  has a Registry account.

             (3)  The requirements of this Division are in addition to the requirements of the other Divisions in this Part.

173J  Requirements for assistance

             (1)  The Authority may issue a person with a certificate of eligibility for carbon capture and storage ready assistance if:

                     (a)  the person has applied for the issue of free Australian emissions units under the emissions-intensive trade-exposed assistance program; and

                     (b)  subsections (2) to (6) apply in respect of that application.

             (2)  The facility (or facilities) to which the application relates uses (or use) coal gasification equipment.

             (3)  In relation to one or more facilities to which an application relates, as at 1 June 2011:

                     (a)  carbon capture and compression plant and equipment is installed at the facility; or

                     (b)  a carbon capture and storage project is in existence but has not been completed and the project is fully committed by the project proponent, having regard to the following matters:

                              (i)  the project proponent’s rights to land for the construction of the project;

                             (ii)  whether contracts for the supply and construction of the  project’s major plant or equipment (including contract provisions for project cancellations) were executed;

                            (iii)  the status of all planning and construction approvals and licences necessary for the commencement of construction of the project (including completed and approved environmental impact statements);

                            (iv)  the level of commitment to financing arrangements for the project;

                             (v)  whether project construction has commenced;

                            (vi)  whether a firm date had been set for project construction to commence.

             (4)  The applicant has not obtained or cannot reasonably obtain, on reasonable economic terms, an off take arrangement or storage option for the captured, compressed and conditioned carbon during the financial years up to and including 2024-25.

             (5)  The applicant must provide the Authority with a report:

                     (a)  setting out the amount or volume of carbon which is reasonably likely to be captured by the carbon capture and compression plant and equipment in each year; and

                     (b)  the date of installation of the carbon capture and compression plant and equipment at the facility; and

                     (c)  the technical specifications of the carbon capture and compression plant and equipment at the facility; and

                     (d)  whether the applicant considers that the carbon capture and compression equipment at the facility meets the requirents of this Division.

             (6)  A report complies with this subsection if:

                     (a)  the report is prepared by a person who has appropriate engineering qualifications; and

                     (b)  the report sets out the person’s estimate of the carbon capture and storage capability of the plant and equipment of the facility; and

                     (c)  the person does not have an interest, pecuniary or otherwise, in the outcome of the application.

173K  Further information

             (1)  The Authority may, by written notice given to an applicant, require the applicant to give the Authority, within the period specified in the notice, further information in connection with the application.

             (2)  If the applicant breaches the requirement, the Authority may, by written notice given to the applicant:

                     (a)  refuse to consider the application; or

                     (b)  refuse to take any action, or any further action, in relation to the application.

173L Issue of certificate of eligibility for carbon capture and storage ready assistance

Scope

             (1)  This section applies to a facility if:

                     (a)  an application for the issue of free Australian emissions units under the emissions-intensive trade-exposed assistance program has been made in respect of the facility; and

                     (b)  subsections 173J(2) to (6) apply in respect of that application.

Issue of certificate

             (2)  After considering the application, the Authority may issue a certificate of eligibility for carbon capture and storage ready assistance in respect of the carbon capture and storage project.

             (3)  A certificate of eligibility for carbon capture and storage ready assistance must state that a specified number is the number of units available for issue as CCSR units in respect of the facility, for the purposes of the subsection 173M(3).

Timing

             (4)  The Authority must take all reasonable steps to ensure that a decision is made on the application:

                     (a)  if the Authority requires the applicant to give further information under subsection 173K(1) in relation to the application—within 90 days after the applicant gave the Authority the information; or

                     (b)  otherwise—within 90 days after the application was made.

Refusal

             (5)  If the Authority decides to refuse to issue a certificate of eligibility for carbon capture and storage ready assistance in respect of the facility, the Authority must give written notice of the decision to the applicant.

Publication of copy of certificate

             (6)  As soon as practicable after issuing a certificate of eligibility for carbon capture and storage ready assistance in respect of the facility, the Authority must publish a copy of the certificate on its website.

173M   Amount of free units to be issued

Scope

             (1)  This section applies to a facility if a certificate of eligibility for carbon capture and storage ready assistance is in force in respect of the facility.

Issue of free units

             (2)  On 1 September in each eligible financial year beginning from 1 July 2011 to 1 July 2024, the Authority must issue CCSR units in respect of the facility in accordance with this section.

             (3)  The number of CCSR units to be issued in respect of a facility in each eligible financial year must be the lesser of:

                     (a)  the number of units available; and

                     (b)  number of units capable of being allocated;

where:

number of units available is the number of Australia emissions units that represents the carbon dioxide equivalence of the greenhouse gases capable of being captured by the carbon capture and compression pant and equipment installed at the facility.

number of units capable of being allocated is the number of CCSR units which, if added to the EITE emissions units, would cause the total number of free Australian emission units issued to a person in respect of the facility to equal number of units which represents the percentage amount set out for that year in the following table:

 

Financial year

Percentage of free Australian emissions units against actual emissions in each financial year (including global recession buffer)

2011-12

94.5%

2012-13

93.2%

2013-14

92.1%

2014-15

90.8%

2015-16

89.7%

2016-17

84.3%

(no global recession buffer applies in this financial year)

2017-18

83.2%

(no global recession buffer applies in this financial year)

2018-19

82.1%

(no global recession buffer applies in this financial year)

2019-20

81.1%

(no global recession buffer applies in this financial year)

2020-21

80.0%

(no global recession buffer applies in this financial year)

2022-23

78.7%

(no global recession buffer applies in this financial year)

2023-24

77.4%

(no global recession buffer applies in this financial year)

2024-25

76.1%

(no global recession buffer applies in this financial year)