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Carbon Pollution Reduction Scheme Bill 2009 [No. 2]

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5786

2008-2009

 

The Parliament of the

Commonwealth of Australia

 

THE SENATE

 

 

Carbon Pollution Reduction Scheme Bill 2009 [No. 2]

 

(1)     Clause 3, page 3 (line 10), at the end of subclause (3), add “including the provision of financial support to developing countries for nationally appropriate mitigation actions and adaptation”.

[object - financial support to developing countries]

(2)     Clause 3, page 3 (lines 13 to 25), omit paragraphs (4)(a) and (b), substitute:

                     (a)  to take action directed towards meeting Australia’s target of reducing net greenhouse gas emissions to at least 25% to 40% below 1990 levels by 2020; and

[object - national emission reduction targets]

(3)     Clause 3, page 3 (line 26), omit “or (b)”.

[object - national emission reduction targets]

(4)     Page 3 (after line 32), after clause 3, insert:

3A  Additional abatement

             (1)  For the purposes of this Act, additional abatement means abatement in emissions that can be estimated to have resulted from the behaviour of the Commonwealth, States and Territories, local government bodies, other entities and individuals, that is calculated to be over and above the emission reductions that could reasonably be expected to result from the increase in energy prices and other factors associated with the introduction of the emissions trading scheme.

             (2)  The regulations must determine a mechanism for the purposes of the scheme embodied in this Act to take into account additional abatement by governments, other entities and individuals in such a way that:

                     (a)  there remains an incentive for additional abatement; and

                     (b)  additional abatement does not reduce the obligations of participants in the scheme embodied in this Act.

             (3)  The Minister must establish an independent expert advisory committee to estimate the level of additional abatement for a year.

             (4)  After the committee has estimated the level of additional abatement for a year, the Minister by legislative instrument must reduce the national scheme cap number for the following year by the amount of the estimated level of additional abatement.

             (5)  If, after the committee has estimated the level of additional abatement for a year, Australia is a party to a comprehensive international agreement that is capable of stabilising atmospheric concentrations of greenhouse gases, Australia’s target reduction of net greenhouse gas emissions under that international agreement is deemed to be increased by the amount of the estimated level of additional abatement.

             (6)  Section 42 (disallowance) of the Legislative Instruments Act 2003 does not apply to a legislative instrument made under subsection (4).

             (7)  Sections 359 to 373 apply to a committee established under this section.

[additional abatement]

(5)     Clause 4, page 5 (line 2), omit “or for a fixed charge”.

[consequential - no issue of units for a fixed charge]

(6)     Clause 5, page 5 (after line 13), after the definition of acquire , insert:

additional abatement has the meaning given by subsection 3A(1).

[additional abatement]

(7)     Clause 5, page 13 (line 27), after “section”, insert “3A or”.

[definition of expert advisory committee]

(8)     Clause 5, page 16 (after line 19), after the definition of generation unit , insert:

Gold Standard certified has the meaning given by subsection 145A(3).

(9)     Clause 13, page 33 (line 15), omit “free”, substitute “auctioned”.

[consequential - auction of units for EITE activities]

(10)   Clause 13, page 33 (line 17), omit “; and”, substitute “.”.

[consequential - no issue of free units to coal-fired electricity generators]

(11)   Clause 13, page 33 (lines 18 and 19), omit paragraph (c).

[consequential - no issue of free units to coal-fired electricity generators]

(12)   Clause 14, page 34 (lines 22 to 33), omit “99%” (wherever occurring), substitute “95%”.

[default reduction in emissions]

(13)   Clause 14, page 35 (after line 8), after paragraph (5)(a), insert:

                    (aa)  must have regard to the principle that reducing the atmospheric concentration of greenhouse gases to 350 parts per million of carbon dioxide equivalence as quickly as possible is in Australia’s national interest;

[mandatory requirement to take into account optimal

 atmospheric concentrations of greenhouse gases]

(14)   Clause 14, page 35 (lines 14 to 17), omit subparagraph (5)(c)(i).

[mandatory requirement to take into account optimal

 atmospheric concentrations of greenhouse gases]

(15)   Clause 15, page 37 (after line 8), after paragraph (4)(a), insert:

                    (aa)  must have regard to the principle that reducing the atmospheric concentration of greenhouse gases to 350 parts per million of carbon dioxide equivalence as quickly as possible is in Australia’s national interest;

[mandatory requirement to take into account optimal

 atmospheric concentrations of greenhouse gases]

(16)   Clause 15, page 37 (lines 14 to 17), omit subparagraph (4)(c)(i).

[mandatory requirement to take into account optimal

 atmospheric concentrations of greenhouse gases]

(17)   Clause 82, page 128 (line 9), omit “or for a fixed charge”.

[consequential - auction of units for EITE activities; no issue of free units to coal-fired electricity generators and reforestation projects; and no issue of units for a fixed charge]

(18)   Clause 82, page 128 (line 13), omit “free”, substitute “auctioned”.

[consequential - auction of units for EITE activities]

(19)   Clause 82, page 128 (line 15), omit “; and”, substitute “.”.

[consequential - no issue of free units to coal-fired electricity generators]

(20)   Clause 82, page 128 (lines 16 to 18), omit paragraph (c).

[consequential - no issue of free units to coal-fired electricity generators]

(21)   Clause 88, page 131 (lines 13 and 14), omit paragraph (b).

[consequential - no issue of units for a fixed charge]

(22)   Clause 88, page 131 (lines 15 and 16), omit paragraph (c).

[consequential - auction of units for EITE activities]

(23)   Clause 88, page 131 (lines 17 and 18), omit paragraph (d).

[consequential - no issue of free units to coal-fired electricity generators]

(24)   Clause 88, page 131 (line 19), omit paragraph (e).

[consequential - no issue of free units to reforestation projects]

(25)   Clause 89, page 131 (line 22) to page 135 (line 23), clause To Be Opposed .

[no issue of units for a fixed charge]

(26)   Clause 90, page 135 (lines 29 to 32), omit paragraph (1)(b), substitute:

                     (b)  the unit is to be issued as the result of an auction.

[consequential - no issue of units for a fixed charge]

(27)   Clause 93, page 137 (line 1), omit “free”, substitute “auctioned”.

[consequential - auction of units for EITE activities]

(28)   Clause 93, page 137 (line 3), omit “and”.

[consequential - no issue of free units to coal-fired electricity generators]

(29)   Clause 93, page 137 (lines 4 to 6), omit paragraph (1)(c).

[consequential - no issue of free units to coal-fired electricity generators]

(30)   Page 138 (after line 4), after clause 95, insert:

95A  Domestic transfers of Australian emissions units

             (1)  If a person (the first person ) is the registered holder of one or more Australian emissions units, the person may, by electronic notice transmitted to the Authority, instruct the Authority to transfer the units from the relevant Registry account kept by the person (the first Registry account ) to:

                     (a)  a Registry account kept by another person; or

                     (b)  another Registry account kept by the first person.

             (2)  An instruction under subsection (1) must set out:

                     (a)  the account number of the first Registry account; and

                     (b)  the account number of the Registry account mentioned in paragraph (1)(a) or (b); and

                     (c)  such other information as is specified in the regulations.

Compliance with instruction

             (3)  If the Authority receives an instruction under subsection (1), the Authority must give effect to the instruction as soon as practicable after receiving it.

             (4)  If the Authority gives effect to an instruction under subsection (1), the Registry must set out a record of the instruction.

             (5)  If the first person is the Commonwealth, the Minister may give an instruction under subsection (1) on behalf of the first person.

95B   Outgoing international transfers of Australian emissions units

             (1)  If a person (the first person ) is the registered holder of one or more Australian emissions units, the person may, by electronic notice transmitted to the Authority, instruct the Authority to transfer the units from the relevant Registry account kept by the person (the first Registry account ) to:

                     (a)  a foreign account kept by another person; or

                     (b)  a foreign account kept by the first person.

             (2)  An instruction under subsection (1) must set out:

                     (a)  the account number of the first Registry account; and

                     (b)  such other information as is specified in the regulations.

Compliance with instruction

             (3)  If the Authority receives an instruction under subsection (1), the Authority must give effect to the instruction as soon as practicable after receiving it.

             (4)  If the Authority gives effect to an instruction under subsection (1), the Registry must set out a record of the instruction.

             (5)  If the first person is the Commonwealth, the Minister may give an instruction under subsection (1) on behalf of the first person.

[international transfer of Australian emissions units]

(31)   Clause 101, page 141 (line 20), omit “ free ”, substitute “ certain ”.

[consequential - auction of units for EITE activities]

(32)   Clause 101, page 141 (line 23) to page 142 (line 3), omit paragraph (1)(a), substitute:

                     (a)  a person has been issued with:

                              (i)  an auctioned Australian emissions unit in accordance with the emissions-intensive trade-exposed assistance program; or

                             (ii)  a free Australian emissions unit in accordance with Part 11 (destruction of synthetic greenhouse gases); and

[consequential - auction of units for EITE activities; and no issue of free units to coal-fired electricity generators and reforestation projects]

(33)   Subdivision D, clauses 103A and 103B, page 143 (line 24) to page 145 (line 14), Subdivision To Be Opposed .

[consequential - auction of units for EITE activities; and no issue of free units to coal-fired electricity generators]

(34)   Clause 129, page 173 (lines 8 to 12), omit paragraph (5A)(a), substitute:

                     (a)  an Australian emissions unit was issued in accordance with the emissions-intensive trade-exposed assistance program; and

[consequential - no issue of free units to coal-fired electricity generators]

(35)   Clause 144, page 190 (after line 7), after the first dot point, insert:

•      There are restrictions on the registration of certain emissions units in the Registry.

[consequential - restrictions on registration of certain emissions units]

(36)   Page 191 (after line 18), after clause 145, insert;

145A  Restrictions on registration of certain emissions units in the Registry

             (1)  The Authority must ensure that, of the total of all Australian emissions units, Kyoto units and non-Kyoto international emissions units registered in the Registry, no more than 20% cumulatively are:

                     (a)  certified emission reductions (including temporary certified emission reductions and long-term certified emission reductions) generated by projects in countries classified as “least developed” by the United Nations; and

                     (b)  emission reduction units; and

                     (c)  any other type of eligible international emissions unit prescribed for the purpose of this section.

             (2)  The Authority must not register in the Registry any certified emission reductions (including temporary certified emission reductions and long-term certified emission reductions) and emission reduction units which are not Gold Standard certified.

             (3)  For the purposes of this Act, Gold Standard certified means certification by the Gold Standard Foundation in accordance with the Gold Standard methodology for carbon offset project development.

[restrictions on registration of certain emissions units]

(37)   Clause 165, page 205 (line 16), at the end of paragraph (2)(c), add “, only to the extent necessary to offset the loss of competitiveness created by the absence of carbon pricing policies in the economies of foreign competitors of the activity”.

[purpose of transitional assistance]

(38)   Clause 165, page 205 (after line 30), at the end of the clause, add:

             (3)  To avoid doubt, transitional assistance under this Part must not compensate for the loss of profits or reduced asset values resulting from the existence of the scheme embodied in this Act and the associated provisions.

[purpose of transitional assistance]

(39)   Clause 165, page 205 (after line 30), at the end of the clause, add:

             (4)  To avoid doubt, the Minister can at any time vary the transitional assistance provided to an activity under this Part in response to changes in the carbon pricing policies in the economies of foreign competitors of the activity.

[no notice period for changes to EITE compensation]

(40)   Clause 166, page 206 (lines 1 to 16), omit the clause, substitute:

166   Simplified outline

                   The following is a simplified outline of this Part:

•      The regulations may formulate a program, to be known as the emissions-intensive trade-exposed assistance program, for the auction of Australian emissions units in respect of activities that:

               (a)     under the program, are taken to be emissions-intensive trade-exposed activities; and

              (b)     are, or are to be, carried on in Australia during a financial year specified in the program.

•      The regulations may provide for assistance under the program in the form of compensatory payments to an emissions-intensive trade-exposed activity, for each unit of production, by way of a credit against the activity’s emissions obligations equivalent to the expected increase in world product prices that would eventuate if foreign competitors had carbon pricing policies similar to those of Australia.

•      The emissions-intensive trade-exposed assistance program may impose reporting or record-keeping requirements on a registered holder under the program of auctioned Australian emissions units.

[consequential - auction of units for EITE activities and compensatory payments for EITE activities]

(41)   Clause 167, page 207 (line 6), omit “issue of free”, substitute “auction of”.

[consequential - auction of units for EITE activities]

(42)   Clause 167, page 207 (after line 10), after subclause (1), insert:

          (1A)  All Australian emissions units issued for the purposes of the emissions-intensive trade-exposed activities program must be auctioned.

[auction of units for EITE activities]

(43)   Clause 167, page 207 (after line 10), after subclause (1), insert:

          (1B)  The regulations may provide for assistance under the program, in the form of compensatory payments to an emissions-intensive trade-exposed activity, for each unit of production, by way of a credit against the activity’s emissions obligations equivalent to the expected increase in world product prices that would eventuate if foreign competitors had carbon pricing policies similar to those of Australia.

          (1C)  The Minister must consult the Productivity Commission before making a recommendation to the Governor-General about regulations to be made for the purposes of subsection (1B).

[compensatory payments for EITE activities]

(44)   Clause 167, page 207 (line 12), omit “free”, substitute “auctioned”.

[consequential - auction of units for EITE activities]

(45)   Clause 167, page 207 (after line 18), at the end of the clause, add:

             (4)  Any regulations made under subsection (1) which prescribe a carbon productivity contribution that is to apply to an emissions-intensive trade-exposed activity must not prescribe a contribution rate that is less than 4% per financial year.

[carbon productivity contribution rate]

(46)   Clause 168, page 207 (line 19) to page 208 (line 3), clause To Be Opposed .

[consequential - auction of units for EITE activities]

(47)   Clause 169, page 208 (line 6), omit “free”, substitute “auctioned”.

[consequential - auction of units for EITE activities]

(48)   Clause 170, page 208 (line 15), omit “free”, substitute “auctioned”.

[consequential - auction of units for EITE activities]

(49)   Clause 171, page 208 (line 24) to page 209 (line 13), clause To Be Opposed .

[consequential - auction of units for EITE activities]

(50)   Clause 173B, page 213 (lines 14 to 20), omit subclause (2), substitute:

No compensatory payments for 2 eligible financial years

             (2)  No compensatory payments in accordance with the emissions-intensive trade-exposed assistance program are to be made to the corporation for:

                     (a)  the first eligible financial year that begins after that time; or

                     (b)  the eligible financial year that next follows the eligible financial year mentioned in paragraph (a).

[consequential - compensatory payments for EITE activities]

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

Division 5—Review of operation of emissions-intensive trade-exposed assistance program

173D  Review by Productivity Commission of operation of assistance program

             (1)  The Productivity Commission must review and report to the Minister on the operation of the emissions-intensive trade-exposed assistance program.

             (2)  The review and report must be conducted in relation to each of the following periods:

                     (a)  the 3-year period commencing 1 July 2010;

                     (b)  each successive 3-year period.

             (3)  The report in relation to a review must be provided to the Minister within 60 days after the end of the 3-year period to which the review relates.

             (4)  Without limiting the matters to be covered by a review under subsection (1), the review must include an examination of the operation of the program:

                     (a)  to determine if there is any evidence of leakage occurring directly as a result of domestic producers facing a higher carbon price relative to major foreign competitors;

                     (b)  to assess the impact of any leakage on the level of jobs, production and emissions in the industry experiencing this leakage;

                     (c)  to assess the economy-wide case for continuing compensatory payments to individual activities, taking into account the impact of the emissions-intensive trade-exposed assistance program and the Electricity Sector Adjustment Scheme on the competitiveness, job creation, production levels and emissions of other domestic industries;

                     (d)  if relevant, to make recommendations about policy options to reduce leakage.

             (5)  The Minister must, within 60 days of receiving a report, review the compensatory payments provided to individual activities under the program and determine whether or not the levels of compensatory payments need to be varied.

             (6)  If the Minister determines under subsection (5) that the levels of compensatory payments to individual activities need to be varied, the Minister must take all reasonable steps to ensure that regulations are made for that purpose within 120 days of having received the relevant report.

             (7)  Regulations made under subsection (6) must not take effect until the beginning of the financial year next after the financial year in which the regulations are made.

             (8)  If the Minister determines under subsection (5) that the levels of compensatory payments do not need to be varied, the Minister must, within 5 sitting days of making that determination, cause to be tabled in each House of the Parliament a written statement setting out the Minister’s reasons for making the determination.

             (9)  If:

                     (a)  the Minister determines under subsection (5) that the levels of compensatory payments do need to be varied and regulations are made for that purpose under subsection (6); and

                     (b)  on a particular day (the tabling day ), a copy of the regulations is tabled before a House of the Parliament under section 38 of the Legislative Instruments Act 2003 ;

then, on or as soon as practicable after the tabling day, the Minister must cause to be tabled before that House a written statement setting out the Minister’s reasons for making the determination under subsection (5).

[review of compensatory payments to EITE activities]

(52)   Part 9, clauses 174 to 189B, page 215 (line 1) to page 242 (line 31), Part To Be Opposed .

[no issue of free units to coal-fired electricity generators]

(53)   Part 10, clauses 190 to 243C, page 243 (line 1) to page 330 (line 3), Part To Be Opposed .

[no issue of free units for reforestation projects]

(54)   Clause 272, page 356 (lines 2 to 28), clause To Be Opposed .

[consequential - no issue of units for a fixed charge]

(55)   Clause 273, page 357 (line 2) to page 358 (line 2), omit subclauses (1), (2) and (3).

[consequential - auction of units for EITE activities; and no issue of free units to coal-fired electricity generators and reforestation projects]

(56)   Clause 274, page 358 (line 13) to page 359 (line 7), omit the clause, substitute:

274   Quarterly reports about issue of free Australian emissions units under Part 11

                   As soon as practicable after the end of each quarter, the Authority must publish on its website the total number of free Australian emissions units with a particular vintage year issued during the quarter in accordance with Part 11 (destruction of synthetic greenhouse gases).

[consequential - auction of units for EITE activities; and no issue of free units to coal-fired electricity generators and reforestation projects]

(57)   Clause 353, page 437 (lines 23 to 25), omit paragraph (1)(ea).

[consequential - no issue of units for a fixed charge]

(58)   Clause 353, page 439 (lines 5 to 8), omit “having regard to the general principle that industry should be given at least 5 years notice of material changes to the provision of assistance under the program”.

[removal of notice period for changes to EITE compensation]

(59)   Clause 353, page 439 (lines 22 and 23), omit “before the end of 30 June 2014”, substitute “by the end of 2 years after the day on which this Act receives the Royal Assent”.

[timing of reviews]

(60)   Clause 353, page 439 (lines 24 to 28), omit subclause (3), substitute:

             (3)  Each subsequent review must be completed within:

                     (a)  2 years after the last day on which a copy of a statement setting out the Commonwealth Government’s response to the recommendations of the previous review was tabled in a House of the Parliament under paragraph 354(6)(b); or

                     (b)  6 months of any significant changes or developments in a relevant international treaty or relevant scientific knowledge.

[periodic reviews]

(61)   Clause 382, page 459 (line 33) to page 460 (line 2), omit “free” (twice occurring), substitute “auctioned”.

[consequential - auction of units for EITE activities]

(62)   Clause 382, page 460 (line 6) to page 460 (line 32), omit subclauses (8), (9) and (9A).

[consequential - no issue of free units to coal-fired electricity generators and reforestation projects]