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Clean Energy Bill 2011

2010-2011

 

The Parliament of the

Commonwealth of Australia

 

HOUSE OF REPRESENTATIVES

 

 

 

 

Presented and read a first time

 

 

 

 

 

 

 

 

 

Clean Energy Bill 2011

 

No.      , 2011

 

(Climate Change and Energy Efficiency)

 

 

 

A Bill for an Act to encourage the use of clean energy, and for other purposes

   

   

   



Contents

Part 1—Preliminary                                                                                                              1

1............ Short title............................................................................................. 1

2............ Commencement................................................................................... 1

3............ Objects................................................................................................ 5

4............ Simplified outline................................................................................ 5

5............ Definitions.......................................................................................... 7

6............ When supply of natural gas occurs................................................... 23

7............ Electronic notice transmitted to the Regulator.................................... 23

8............ Crown to be bound........................................................................... 24

9............ Extension to external Territories........................................................ 24

10.......... Extension to exclusive economic zone and continental shelf............. 24

11.......... Extension to Joint Petroleum Development Area.............................. 24

12.......... Application to foreign ships.............................................................. 24

Part 2—Carbon pollution cap                                                                                       26

13.......... Simplified outline.............................................................................. 26

14.......... Carbon pollution cap......................................................................... 26

15.......... Disallowance of regulations.............................................................. 28

16.......... When regulations must be tabled....................................................... 28

17.......... Default carbon pollution cap for 2015-16......................................... 30

18.......... Default carbon pollution cap for a later flexible charge year.............. 31

Part 3—Liable entities                                                                                                        33

Division 1—Introduction                                                                                           33

19.......... Simplified outline.............................................................................. 33

Division 2—Direct emitters of greenhouse gases                                         36

Subdivision A—General rules                                                                                36

20.......... Liable entity—person who has operational control of a facility......... 36

21.......... Liable entity—participant in designated joint venture........................ 39

22.......... Liable entity—holder of a liability transfer certificate........................ 42

Subdivision B—Landfill facilities                                                                        44

23.......... Liable entity for landfill emissions—person who has operational control of a landfill facility  44

24.......... Liable entity for landfill emissions—participant in designated joint venture             48

25.......... Liable entity for landfill emissions—holder of a liability transfer certificate             52

Subdivision C—Adjustment of provisional emissions number in relation to a facility in the Joint Petroleum Development Area or the Greater Sunrise unit area          56

26.......... Joint Petroleum Development Area—adjustment of provisional emissions number                56

27.......... Joint Petroleum Development Area/Greater Sunrise unit area—adjustment of provisional emissions number        57

28.......... Greater Sunrise unit area—adjustment of provisional emissions number 57

Subdivision D—Anti-avoidance                                                                             58

29.......... Anti-avoidance.................................................................................. 58

Subdivision E—Covered emissions from the operation of a facility           60

30.......... Covered emissions from the operation of a facility........................... 60

31.......... Measurement of covered emissions from the operation of a facility.. 63

Subdivision F—Legacy emissions from the operation of a landfill facility 64

32.......... Legacy emissions from the operation of a landfill facility................. 64

Division 3—Natural gas                                                                                             65

33.......... Liable entity—supply of natural gas.................................................. 65

35.......... Liable entity—supply of natural gas to a person who quotes the person’s OTN      66

36.......... Liable entity—supply of natural gas to a person who misuses the person’s OTN   69

Division 4—Obligation transfer numbers                                                        71

Subdivision A—Issue of obligation transfer numbers                                     71

37.......... Issue of OTN.................................................................................... 71

38.......... Application for OTN......................................................................... 71

39.......... Further information........................................................................... 71

40.......... Issue of OTN as the result of an application..................................... 72

41.......... Issue of OTN on the Regulator’s own initiative................................ 73

42.......... Surrender of OTN............................................................................. 73

43.......... Cancellation of OTN......................................................................... 73

43A....... Publication of list of OTNs that have been cancelled or surrendered 74

44.......... OTN is not transferable..................................................................... 74

45.......... OTN Register.................................................................................... 74

46.......... Evidentiary provisions...................................................................... 76

47.......... Notification of change of name or address of OTN holder or natural gas supplier   77

Subdivision B—Method of quotation of obligation transfer numbers        78

48.......... Quotation of OTN............................................................................. 78

49.......... Effect of withdrawal of quotation of OTN........................................ 78

50.......... Withdrawal of quotation of OTN if OTN is cancelled or surrendered 79

51.......... Withdrawal of quotation of OTN by OTN holder............................. 79

52.......... Withdrawal of quotation of OTN by agreement................................ 79

53.......... Validation of quotation of OTN........................................................ 80

54.......... Effect of surrender or cancellation of OTN—grace period for quotation in relation to a single supply    81

55.......... Effect of surrender or cancellation of OTN—grace period for quotation in relation to a class of supplies               81

Subdivision C—Quotation of obligation transfer numbers                           82

55A....... Large gas consuming facility............................................................. 82

55B....... Quotation of OTN—large gas consuming facility............................. 83

56.......... Quotation of OTN—large user of natural gas................................... 83

57.......... Quotation of OTN—use of natural gas as a feedstock...................... 85

58.......... Quotation of OTN—use of natural gas in manufacturing compressed natural gas, liquefied natural gas or liquid petroleum gas.................................................................................... 86

Subdivision D—General provisions                                                                     87

59.......... Acceptance of quotation of OTN in relation to a single supply......... 87

60.......... Acceptance of quotation of OTN in relation to a class of supplies.... 88

62.......... False or misleading declaration......................................................... 90

63.......... Misuse of OTN................................................................................. 90

64.......... Quotation of bogus OTN.................................................................. 91

Division 5—Designated joint ventures                                                               93

Subdivision A—Mandatory designated joint venture                                      93

65.......... Mandatory designated joint venture.................................................. 93

66.......... Notification....................................................................................... 93

Subdivision B—Declared designated joint venture                                          96

67.......... Joint venture declaration test............................................................. 96

67A....... Relevant operator.............................................................................. 96

68.......... Application for declaration................................................................ 96

69.......... Further information........................................................................... 97

70.......... Making of declaration....................................................................... 97

71.......... Duration of declaration...................................................................... 99

71A....... Notification..................................................................................... 100

72.......... Revocation of declaration................................................................ 100

Subdivision C—Participating percentage determination                             101

73.......... Provisional application for participating percentage determination.. 101

74.......... Application for participating percentage determination.................... 102

75.......... Further information......................................................................... 102

76.......... Participating percentage determination made in response to an application               103

77.......... Participating percentage determination made on the Regulator’s own initiative        104

78.......... Criteria for making participating percentage determination.............. 104

78A....... Duration of determinations.............................................................. 106

79.......... Replacement determinations............................................................ 107

Division 6—Liability transfer certificates                                                      108

Subdivision A—Transfer of liability to another member of a corporate group            108

80.......... Corporate group transfer test........................................................... 108

81.......... Application for liability transfer certificate...................................... 108

82.......... Further information......................................................................... 109

83.......... Issue of liability transfer certificate.................................................. 109

Subdivision B—Transfer of liability to a person who has financial control of a facility            110

84.......... Financial control transfer test.......................................................... 110

85.......... Application for liability transfer certificate...................................... 111

86.......... Further information......................................................................... 112

87.......... Issue of liability transfer certificate.................................................. 112

Subdivision C—Other provisions                                                                        114

88.......... Duration of liability transfer certificate............................................ 114

89.......... Surrender of liability transfer certificate.......................................... 115

90.......... Cancellation of liability transfer certificate....................................... 116

91.......... Liability transfer certificate is not transferable................................. 118

92.......... Financial control.............................................................................. 118

Division 7—Opt-in Scheme                                                                                     120

92A....... Opt-in Scheme................................................................................ 120

92B....... Reduction of provisional emissions number................................... 122

92C....... Reporting requirement..................................................................... 122

92D....... Record-keeping requirement........................................................... 122

92E........ Other matters................................................................................... 123

92F........ Ancillary or incidental provisions................................................... 123

92G....... Commissioner of Taxation and Chief Executive Officer of Customs to be notified of declaration           123

Part 4—Carbon units                                                                                                       124

Division 1—Introduction                                                                                         124

93.......... Simplified outline............................................................................ 124

Division 2—Issue of carbon units                                                                        125

94.......... Issue of carbon units....................................................................... 125

95.......... Identification number...................................................................... 125

96.......... Vintage year.................................................................................... 125

97.......... When carbon units may be issued................................................... 125

98.......... How carbon units are to be issued.................................................. 125

99.......... Circumstances in which carbon units may be issued....................... 126

100........ Issue of carbon units for a fixed charge.......................................... 126

100A..... Extension of issue period................................................................ 131

101........ Limit on issue of carbon units......................................................... 132

102........ Carbon units—total number............................................................ 132

Division 3—Property in, and transfer of, carbon units                           133

103........ A carbon unit is personal property.................................................. 133

103A..... Ownership of carbon unit............................................................... 133

104........ Transfer of carbon units.................................................................. 133

105........ Transmission of carbon units by assignment.................................. 134

106........ Transmission of carbon units by operation of law etc..................... 135

107........ Transfer of carbon units to another Registry account held by the transferor             137

108........ Outgoing international transfers of carbon units............................. 138

109........ Incoming international transfers of carbon units............................. 139

109A..... Registration of equitable interests in relation to a carbon unit.......... 139

110........ Equitable interests in relation to a carbon unit................................. 140

Division 4—Auctions of carbon units                                                                141

111........ Issue of carbon units as the result of an auction.............................. 141

112........ Secondary market auctions of relinquished carbon units................. 144

113........ Policies, procedures and rules for auctioning carbon units.............. 144

114........ Benchmark average auction charge................................................. 146

Division 5—Special provisions relating to free carbon units               148

115........ Cancellation of certain unused free carbon units............................. 148

116........ Buy-back of certain free carbon units.............................................. 148

116A..... Extension of buy-back period......................................................... 149

Part 5—Emissions number                                                                                            151

117........ Simplified outline............................................................................ 151

118........ Emissions number........................................................................... 151

119........ Assessment of emissions number—incorrect report given by liable entity               151

120........ Assessment of emissions number—no report given by liable entity 153

Part 6—Surrender of eligible emissions units                                                    156

Division 1—Introduction                                                                                         156

121........ Simplified outline............................................................................ 156

Division 2—How eligible emissions units are surrendered                   158

122........ How eligible emissions units are surrendered................................. 158

123........ Surrender restrictions...................................................................... 160

124........ Charge on surrender of eligible international emissions units......... 161

Division 3—Unit shortfalls                                                                                      162

Subdivision A—Fixed charge years                                                                   162

125........ Provisional unit shortfall................................................................. 162

126........ Interim emissions number............................................................... 164

127........ Adjustment of total interim emissions numbers.............................. 166

128........ Final unit shortfall........................................................................... 167

129........ Estimation error unit shortfall.......................................................... 170

130........ Remission of unit shortfall charge imposed on estimation error unit shortfall          171

131........ Surplus and estimation error adjustment number............................ 172

132........ Refund—surplus surrender............................................................. 174

Subdivision B—Flexible charge years                                                               175

133........ Unit shortfall................................................................................... 175

Division 4—Unit shortfall charge                                                                       179

134........ When unit shortfall charge becomes due and payable..................... 179

134A..... Remission of unit shortfall charge—voluntary disclosure by liable entity of incorrect emissions number               179

135........ Late payment penalty....................................................................... 182

136........ Recovery of unit shortfall charge and late payment penalty............. 183

137........ Set-off............................................................................................. 183

138........ Liability transfer certificate—statutory guarantee............................ 184

140........ Refund of overpayments................................................................. 185

Division 5—Assessment of unit shortfall and unit shortfall charge 186

141........ Assessment of unit shortfall and unit shortfall charge..................... 186

Division 6—Extension of surrender deadline                                               188

142........ Extension of surrender deadline...................................................... 188

Part 7—Jobs and Competitiveness Program                                                     190

Division 1—Introduction                                                                                         190

143........ Aim and objects.............................................................................. 190

144........ Simplified outline............................................................................ 191

Division 2—Formulation of the Jobs and Competitiveness Program 193

145........ Jobs and Competitiveness Program................................................ 193

146........ Relinquishment requirement............................................................ 194

147........ Reporting requirement..................................................................... 194

148........ Record-keeping requirement........................................................... 195

149........ Other matters................................................................................... 195

150........ Ancillary or incidental provisions................................................... 196

Division 3—Compliance with reporting and record-keeping requirements under the Jobs and Competitiveness Program                                                            197

151........ Compliance with reporting and record-keeping requirements......... 197

Division 4—Special information-gathering powers                                  198

152........ Minister may obtain information..................................................... 198

153........ No assistance for 2 eligible financial years if corporation refuses or fails to comply with request for information  199

154........ Disclosure of information to the Regulator..................................... 199

Division 5—Productivity Commission inquiries                                         201

155........ Productivity Commission inquiries................................................. 201

156........ Matters to which the Productivity Commission must have regard.. 202

157........ Report of inquiry............................................................................. 205

158........ No limit on Productivity Minister’s powers.................................... 206

Part 8—Coal-fired electricity generation                                                              207

Division 1—Introduction                                                                                         207

159........ Object.............................................................................................. 207

160........ Simplified outline............................................................................ 207

Division 2—Issue of free carbon units in respect of generation complexes         209

161........ Issue of free carbon units in respect of generation complexes......... 209

Division 3—Certificate of eligibility for coal-fired generation assistance             214

162........ Application for certificate of eligibility for coal-fired generation assistance              214

163........ Form of application......................................................................... 215

164........ Further information......................................................................... 215

165........ Issue of certificate of eligibility for coal-fired generation assistance 216

166........ Criteria for issuing certificate of eligibility for coal-fired generation assistance        217

167........ Annual assistance factor.................................................................. 218

168........ Emissions intensity......................................................................... 219

Division 4—Power system reliability                                                                220

169........ No assistance if generation complex does not pass the power system reliability test                220

170........ Power system reliability test............................................................ 220

171........ Replacement capacity...................................................................... 223

172........ Nomination of generation units....................................................... 226

173........ Validity of nomination.................................................................... 229

174........ Anticipatory certification—reduction in nameplate rating............... 229

175........ Anticipatory certification—cessation of registration as a generator 231

176........ Intermediary registered as a generator............................................. 232

Division 5—Clean Energy Investment Plans                                                233

177........ No assistance unless Clean Energy Investment Plan given............. 233

178........ Clean Energy Investment Plan........................................................ 233

179........ Copy of Clean Energy Investment Plan to be given to the Regulator 234

180........ Publication of Clean Energy Investment Plan................................. 234

Division 6—Closure contracts                                                                              235

181........ Restrictions on assistance if closure contract has been entered into. 235

181A..... Exemptions from power system reliability test and Clean Energy Investment Plan  236

Part 9—Publication of information                                                                         237

Division 1—Introduction                                                                                         237

182........ Simplified outline............................................................................ 237

Division 2—Information about liable entities                                               238

183........ Liable Entities Public Information Database.................................... 238

184........ Liable entities to be entered in the Information Database................. 238

185........ Emissions number to be entered in the Information Database......... 239

186........ Estimate of total of emissions numbers to be entered in the Information Database   239

187........ Unit shortfall to be entered in the Information Database................. 240

188........ Unpaid unit shortfall charge to be entered in the Information Database 241

189........ Number of surrendered eligible emissions units to be entered in the Information Database     242

190........ Relinquishment requirement to be entered in the Information Database 242

191........ Unpaid administrative penalty to be entered in the Information Database 243

192........ Number of relinquished units to be entered in the Information Database 244

193........ Correction and rectification of the Information Database................ 244

Division 3—Information about holders of Registry accounts             246

194........ Information about holders of Registry accounts.............................. 246

Division 4—Information about units                                                                 247

195........ Information about auction results—general..................................... 247

196........ Information about auction results—last 6 months........................... 247

197........ Information about issue of carbon units for a fixed charge............. 249

198........ Information about issue of free carbon units................................... 250

199........ Quarterly reports about issue of free carbon units........................... 250

200........ Information about surrender of borrowed and banked eligible emissions units        251

201........ Information about total emissions numbers and unit shortfalls....... 251

202........ Publication of concise description of the characteristics of carbon units.. 252

Division 5—Information about relinquishment requirements for persons other than liable entities     253

203........ Information about relinquishment requirements.............................. 253

204........ Information about unpaid administrative penalties.......................... 254

205........ Information about number of relinquished units............................. 254

Division 6—Information about designated large landfill facilities    256

206........ Publication of list of designated large landfill facilities.................... 256

Part 10—Fraudulent conduct                                                                                      257

207........ Simplified outline............................................................................ 257

208........ Units issued as a result of fraudulent conduct—court may order relinquishment     257

Part 11—Relinquishment of carbon units                                                           260

Division 1—Introduction                                                                                         260

209........ Simplified outline............................................................................ 260

Division 2—How carbon units are relinquished                                          261

210........ How carbon units are relinquished.................................................. 261

211........ Deemed relinquishment................................................................... 262

Division 3—Compliance with relinquishment requirements                264

212........ Compliance with relinquishment requirements................................ 264

213........ Late payment penalty....................................................................... 266

214........ Recovery of penalties...................................................................... 267

215........ Set-off............................................................................................. 267

216........ Refund of overpayments................................................................. 268

Part 12—Notification of significant holding of carbon units                   269

217........ Simplified outline............................................................................ 269

218........ Notification of significant holding of carbon units—controlling corporation of a group          269

219........ Notification of significant holding of carbon units—non-group entity 272

Part 13—Information-gathering powers                                                              275

220........ Simplified outline............................................................................ 275

221........ Regulator may obtain information or documents............................. 275

222........ Copying documents—compensation............................................... 276

223........ Copies of documents....................................................................... 276

224........ Regulator may retain documents..................................................... 277

225........ Self-incrimination............................................................................ 277

Part 14—Record-keeping requirements                                                               279

226........ Simplified outline............................................................................ 279

227........ Record-keeping requirements—general.......................................... 279

228........ Record-keeping requirements—quotation of OTN......................... 280

Part 15—Monitoring powers                                                                                       282

Division 1—Simplified outline                                                                               282

229........ Simplified outline............................................................................ 282

Division 2—Appointment of inspectors and issue of identity cards 283

230........ Appointment of inspectors.............................................................. 283

231........ Identity cards................................................................................... 283

Division 3—Powers of inspectors                                                                        285

Subdivision A—Monitoring powers                                                                   285

232........ Inspector may enter premises by consent or under a warrant.......... 285

233........ Monitoring powers of inspectors.................................................... 285

234........ Persons assisting inspectors............................................................ 288

Subdivision B—Powers of inspectors to ask questions and seek production of documents          288

235........ Inspector may ask questions and seek production of documents.... 288

236........ Self-incrimination............................................................................ 289

Division 4—Obligations and incidental powers of inspectors              291

237........ Consent........................................................................................... 291

238........ Announcement before entry under warrant..................................... 291

239........ Inspector to be in possession of warrant......................................... 291

240........ Details of warrant etc. to be given to occupier................................. 292

241........ Expert assistance to operate electronic equipment........................... 292

242........ Compensation for damage to electronic equipment......................... 293

Division 5—Occupier’s rights and responsibilities                                    295

243........ Occupier entitled to observe execution of warrant........................... 295

244........ Occupier to provide inspector with facilities and assistance............ 295

Division 6—Monitoring warrants                                                                       296

245........ Monitoring warrants....................................................................... 296

Division 7—Powers of magistrates                                                                    298

246........ Powers of magistrates..................................................................... 298

Part 16—Liability of executive officers of bodies corporate                    299

247........ Simplified outline............................................................................ 299

248........ Civil penalties for executive officers of bodies corporate................ 299

249........ Reasonable steps to prevent contravention...................................... 300

Part 17—Civil penalty orders                                                                                      301

250........ Simplified outline............................................................................ 301

251........ References to Court......................................................................... 301

252........ Civil penalty orders......................................................................... 301

253........ Who may apply for a civil penalty order......................................... 303

254........ Two or more proceedings may be heard together............................ 303

255........ Time limit for application for an order............................................. 303

256........ Civil evidence and procedure rules for civil penalty orders............. 303

257........ Civil proceedings after criminal proceedings................................... 303

258........ Criminal proceedings during civil proceedings............................... 303

259........ Criminal proceedings after civil proceedings................................... 304

260........ Evidence given in proceedings for a civil penalty order not admissible in criminal proceedings              304

261........ Mistake of fact................................................................................ 304

262........ State of mind................................................................................... 305

263........ Continuing contraventions.............................................................. 306

Part 18—Infringement notices                                                                                    308

264........ Simplified outline............................................................................ 308

265........ When an infringement notice can be given...................................... 308

266........ Matters to be included in an infringement notice............................. 308

267........ Amount of penalty.......................................................................... 309

268........ Withdrawal of an infringement notice............................................. 309

269........ What happens if the penalty is paid................................................. 309

270........ Effect of this Part on civil penalty proceedings............................... 310

271........ Regulations..................................................................................... 310

Part 19—Offences relating to unit shortfall charge and administrative penalties               311

Division 1—Introduction                                                                                         311

272........ Simplified outline............................................................................ 311

Division 2—Offences relating to unit shortfall charge                            312

273........ Scheme to avoid existing liability to pay unit shortfall charge......... 312

274........ Scheme to avoid future liability to pay unit shortfall charge............ 314

Division 3—Offences relating to administrative penalties                    317

275........ Scheme to avoid existing liability to pay administrative penalty...... 317

276........ Scheme to avoid future liability to pay administrative penalty......... 319

Part 20—Enforceable undertakings                                                                        322

277........ Simplified outline............................................................................ 322

278........ Acceptance of undertakings............................................................ 322

279........ Enforcement of undertakings.......................................................... 322

Part 21—Review of decisions                                                                                       324

280........ Simplified outline............................................................................ 324

281........ Reviewable decisions...................................................................... 324

282........ Applications for reconsideration of decisions made by delegates of the Regulator   326

283........ Reconsideration by the Regulator.................................................... 327

284........ Deadline for reconsideration........................................................... 327

285........ Review by the Administrative Appeals Tribunal............................. 327

286........ Stay of proceedings for the recovery of unit shortfall charge or late payment penalty              328

Part 22—Reviews by the Climate Change Authority                                   330

Division 1—Simplified outline                                                                               330

287........ Simplified outline............................................................................ 330

Division 2—Periodic reviews of this Act and the associated provisions                 331

288........ Periodic reviews of this Act and the associated provisions to be conducted by the Climate Change Authority        331

289........ Periodic reviews of the level of carbon pollution caps etc............... 333

290........ Updated review of the level of the carbon pollution cap for 2020-21 335

291........ Periodic reviews of progress in achieving Australia’s emission reduction targets and national carbon budget        336

292........ Report of review............................................................................. 337

Division 3—Other reviews                                                                                      339

293........ Reviews of this Act and the associated provisions to be conducted by the Climate Change Authority at the request of the Minister or the Parliament............................................................... 339

294........ Report of review............................................................................. 341

Part 23—Miscellaneous                                                                                                   343

295........ Miscellaneous functions of the Regulator....................................... 343

296........ Computerised decision-making....................................................... 344

297........ Regulator’s power to require further information............................ 344

297A..... Actions may be taken by an agent of a person................................ 345

298........ Delegation by the Minister.............................................................. 346

299........ Delegation by a State Minister or a Territory Minister.................... 346

300........ Delegation by the Secretary............................................................. 346

301........ Concurrent operation of State and Territory laws............................ 347

302........ Law relating to legal professional privilege not affected.................. 347

303........ Arrangements with States and Territories....................................... 347

303A..... Contracts and arrangements to protect energy security.................... 348

303B..... Loans to owners etc. of emissions-intensive coal-fired generation complexes         349

304........ Liability for damages....................................................................... 350

305........ Executive power of the Commonwealth.......................................... 351

306........ Notional payments by the Commonwealth...................................... 351

307........ Alternative constitutional basis........................................................ 351

308........ Compensation for acquisition of property....................................... 354

309........ Prescribing matters by reference to other instruments..................... 355

310........ Administrative decisions under the regulations............................... 355

311........ Transitional—definitions................................................................. 355

312........ Regulations..................................................................................... 356

 



A Bill for an Act to encourage the use of clean energy, and for other purposes

The Parliament of Australia enacts: