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Ozone Protection Amendment Bill 1995



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House: House of Representatives

Portfolio: Environment, Sport and Territories

Commencement: Royal Assent: except for Section 3 and Schedule 1 (other than item 18 of Part I) which commence on 1 January 1996

Purpose

The Bill:

.amends the Ozone Protection Act 1989 (the Principal Act) to expand and consolidate 1 Australia's implementation of the 1992 amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer (the Montreal Protocol) 2 made under the 1985 Vienna Convention for the Protection of the Ozone Layer 3 (the Convention); and

.repeals the Ozone Protection (Licence Fees - Manufacture) Act 1989 and the Ozone Protection (Licence Fees - Imports) Act 1989 which are replaced by new Bills. 4

The amendments to the Principal Act:

.terminate current licences for CFCs (chlorofluorocarbons), halon, methyl chloroform and carbon tetrachloride on 31 December 1995; establish a new system of essential use licences for manufacture and import of these substances and used substances licences of those substances beyond 1 January 1996 for limited purposes under the Montreal Protocol;

.establish an Australian cap = an industry limit + reserve HCFC quota for the manufacture, import and export of HCFCs (hydrochlorofluorocarbons);

. phase-o ut HCFCs by industry self-regulation under a gradual reducing industry limit reaching zero use by 2030;

.establish controlled substances licences for the manufacture, import and export of HCFCs below the industry limit. Activate a 2 year HCFC quota allocation period for licensees where 90% (the threshold) of the industry limit is exceeded;

. allocate reserve HCFC quotas to licensees where exceptional circumstances exist ;

.establish controlled substances licences for methyl bromide;

.ban the export and import of HBFC (hydrobromofluorocarbons);

.establish a new user pays licensing and administrative scheme; and

.establish an Ozone Protection Trust Fund (or an Ozone Protection Res providing the Financial Management Accountability Bill 1994 is enacted) to fund administration and information programs for HCFC and methyl bromide.

Background

Ozone layer

Ozone is created by the reaction of ultra violet (UV) rays on oxygen molecules in the stratosphere. The ozone layer is a thin layer concentrated in the stratosphere at 15 to 50km above the earth's surface with the greatest concentration at 20-25km. 5 The stratosphere absorbs 90% of the sun's UV rays. Absorption of these rays heats the stratosphere to temperatures much higher than those in the troposphere which is important to the earth's climate patterns. The amount of ozone in the stratosphere varies with latitude, night and day, seasons and the balance between the rate it is being destroyed and created. The highest levels of ozone are located between 60 0 and 80 0 latitude. 6 Ozone depletion on a larg scale was first observed in 1985 over Antarctica which peaked in 1993 and 1994. 7 Ozone depletion is expected to peak around 2000 followed by improvements around 2050.

Increased UV radiation leads to increased risk of skin cancer, genetic damage, suppression of the immune system, damage to fish and crab larvae, impediment of photosynthesis and may affect forest productivity. 8

Ozone depletion

UV light breaks down CFCs, halons, carbon tetrachloride, methyl chloroform, methyl bromide, HBFCs and HCFCs to release chlorine or bromine radicals which catalyse ozone depletion. CFC's and halons deplete the ozone layer because they are very stable, persisting for over 100 years in the lower atmosphere and diffusing into the stratosphere. By 1993 20 million tonnes of CFCs had been released into the atmosphere. One CFC created chlorine atom can catalyse the destruction of as many as 100,000 ozone molecules. 9 A 1% decrease in ozone causes a 1-2% increase in UV radiation. 10 A study published in Science (July 1995) indicates a decrease in atmospheric methyl chloroform due to its regulation under the Montreal Protocol. 11

Ozone depletion measurement

The main mechanism used to measure ozone depletion under the Montreal Protocol is: ozone depleting potential (ODP) - ODP is the amount of stratospheric ozone destroyed by the emission of a gas over its life-time compared to a comparable amount of CFC-11. 12 An ODP tonne is the metric tonnage multiplied by the ODP of each substance.

Hydrochlorofluorocarbons (HCFCs)

In HCFC molecules some of the chlorine is replaced by hydrogen making them less stable with shorter life spans of 2-20 years 13 and less damaging to the ozone than CFCs. The Montreal Protocol, as amended in 1992, includes approximately 40 HCFCs for total phase-out by 2030. The aim is to allow use of HCFCs as an interim substitute for CFCs. Only about 4 of the 7 most common HCFCs are used in Australia in significant quantities for - refrigeration, air conditioning, solvents, aerosols (propellant or solvent), manufacture of plastic foams and fire suppressants. A table of specific HCFCs used in Australia is in Attachment A. 14 In 1993 Australia used 2,573 tonnes of HCFC. The only Australian manufacturer proposes to cease production by the end of 1995. 15

Most HCFCs will be phased out by the year 2015. Based on asessments of expert panels under the Montreal Protocol, the Environment Protection Agency (EPA) considers there is little justification for new uses of HCFCs 16 as alternatives have been identified for most uses. A small quota of HCFCs will be allocated until 2030 for long life commercial air conditioning equipment. 17

Methyl Bromide

Methyl bromide is a fumigant used to kill pests and diseases in soils (for crops including strawberries, cut flowers, some fruit and vegetables, stored grains and primary products). 18 Global use is estimated at 65,000 tonnes per year. The US proposes to place a domestic ban on methyl bromide from 2001. Parties to the Montreal Protocol have agreed to reduce emissions and recycle and reclaim methyl bromide. Evaluations are being carried out by the Scientific Assessment Panel and Technology Assessment Panel of the United Nations Environment Program (UNEP) and will be examined at the 1995 Meeting of the Parties. 19

International action

The 1985 Vienna Convention for the Protection of the Ozone Layer

The Convention (which has 152 Parties) does not expressly refer to ozone depleting substances. It requires Parties to - take appropriate legislative and administrative measures to protect human health and the environment against ozone depletion; and cooperate in scientific research and formulation of measures and Protocols (Article 2).

The 1987 Montreal Protocol

In 1987 the Parties finalised a Protocol to the Convention - the Montreal Protocol on Substances that Deplete the Ozone Layer (which has 150 Parties). This limits the use of controlled substances specified in its Annexes. The Parties agree to:

.assess control measures on the basis of scientific, environmental, technical and economic information and convene appropriate panels of experts 20 (Article 6). The Parties may make adjustments to the Annexes (which are binding on the Parties (Article 2(9)(d)); and decide whether reductions of production or consumption of controlled substances is required;

.phase-out listed ODP substances by specified phase-out dates (Articles 2A - 2H);

.ban import and export of specified controlled substances to non-Protocol countries by specified dates (Article 4);

.allow developing country Parties a delay of 10 years for meeting the phase-out measures in Articles 2A -2E (CFCs, halons, carbon tetrachloride and methyl bromide) for "basic domestic needs" (Article 5);

.provide data on production, import and export of controlled substances (Article 7);

.promote research, development and exchange of information on technologies for reduction of emissions and alternatives to controlled substances. Taking particular account of the needs of developing countries (Article 9);

.contribution to a Multilateral Fund to finance transfer of technologies (Articles 10 and 10A); 21 and

.regular Meetings of the Parties, presently held annually (Article 11);

Meetin gs of the Parties are open to agencies of the UN, the International Atomic Agency and non-Party States as observers.

Amendments to Montreal Protocol

The table in Attachment B shows the phasing-out of controlled substances under the Montreal Protocol from the original 1987 controls to the amendments made in 1990 and 1992.

1992 amendment

The 1992 amendment was agreed (by 46 of the Parties) at the Fourth Meeting of the Parties, Copenhagen, 23-25 November 1992. Australia accepted the Copenhagen Amendment on 30 June 1994 and it entered into force for Australia on 28 September 1994. 22 The 1992 amendment has been the most significant progression of the Montreal Protocol requiring commencement of the phasing-out of most ozone depleting chemicals from 1996.

The Parties agreed to certain controls on HCFCs operative from 1 January 1996. The starting HCFC cap allowed in the Montreal Protocol to which the initial 35% reduction target is applied is calculated by the formula - 3.1% of 1989 consumption of CFCs plus HCFC consumption. (Australia has chosen to set a lesser limit than allowed under this formula and this is discussed under calculation of the Australian cap below).

35% reduction by 2004

65% reduction by 2010

90% reduction by 2015

99.5% reduction by 2020

100% reduction by 2030.

"Essential uses" under the Montreal Protocol

The Parties have established a procedure to allow limited production and import of controlled substances (CFCs, methyl chloroform and carbon tetrachloride) for "essential uses" beyond 1 January 1996. The Parties may nominate controlled substances to the Montreal Protocol Secretariat for essential services which meet agreed criteria. This covers the continued import of CFCs for metered dose inhalers and CFCs for laboratory and analytical uses. Australia has approval under the Montreal Protocol for "essential uses" for 1996 and 1997. Gradually uses are expected to be satisfied by recycling, reprocessing and development of alternatives. 23

Recent developments

The Fifth Meeting of the Parties was held in Bangkok 17-19 November 1993. Seventeen Parties sought to bring HCFC phase-out forward to 2015. Some European and Scandanavian countries have elected for a tighter schedule for all HCFCs. The USA has adopted an earlier phase-out for HCFC-141b (which has a high ODP). 24 Issues which will be discussed at the 7th Meeting of the Parties, 5-7 December 1995 include - reduced use of HCFCs and methyl bromide, revised phase-out schedules, definition of terms, limiting CFC use as chemical process agents, dumping of obsolete ODS-using products and technologies in developing countries, illegal exports and recycled substances. 25

Australian action

The Ozone Protection Act 1989, the Principal Act

The Principal Act commenced on 17 March 1989 and implements Australia's obligations under the Convention and the Montreal Protocol. It operates concurrently with consistent State and Territory legislation. The objectives of the Principal Act under s.3 are:

.to establish controls on the manufacture, import, export and distribution of substances that deplete ozone in the atmosphere; and

.to encourage Australian industry to replace and reduce ozone depleting substances as reasonably possible with available alternative substances and technology.

On 5 July 1989 the Australian Environment Council adopted a Strategy for Ozone Protection to provide a timetable for the phase-out of ozone depleting substances in Australia. An Ozone Protection Consultative Committee was established comprising representatives from government, industry, community and conservation groups.

During 1986 Australia used 14,633 tonnes of CFCs, by 1992 this had been reduced to 5,540 tonnes. Under the existing regime in the Principal Act, Australia will phase-out manufacture and importation of CFCs by 1 January 1996 as required under the Montreal Protocol. From January 1991 and 1992 regulations regulated the manufacture and import of polyurethane foam. 26 Official reporting of methyl bromide commenced on 1 January 1993 and domestic consumption was frozen at 1991 levels from 1 January 1995. Australia imported 1,200 tonnes of methyl bromide in 1994 and imports in 1995 have been limited to 688 tonnes for non-quarantine and pre-shipment uses.

In 1994 regulations commenced prohibiting manufacture and importation of HCFCs and HBFCs without a licence from 1 January 1996 and methyl bromide from 1 January 1995 (but continuing exemption of methyl bromide for quarantine and pre-shipment purposes). 27

In August 1993 the Australian and New Zealand Environment and Conservation Council (ANZECC) released a report, Draft Strategy for Ozone Protection in Australia and in April 1994 a Revised Strategy for Ozone Protection in Australia. 28 In April 1995 ANZECC endorsed controls allowing interim use of of HCFCs until their phase-out. ANZECC recommended that supply and production of HCFCs be regulated by Commonwealth legislation and emission and use of HCFCs be regulated by State and Territory legislation. The EPA is the Commonwealth agency responsible for coordinating Australian action regarding the ozone.

HCFC control principles

The Revised Strategy and 1994 HCFC Phase-out Policy Proposals Paper have identified certain principles to underpin Australian controls:

.be simple to understand and administer;

.discourage new uses of HCFCs pursuant to the Montreal Protocol;

.minimise industry compliance costs;

.respect existing market activity; and

.allow new market entrants for HCFC manufacture or import; and

.apply polluter pays principles. 29

Calculation of Australian cap

The formula for calculating the initial HCFC cap is specified in Article 2F of the Montreal Protocol as - 3.1% of 1989 CFC consumption plus HCFC consumption. For Australia this would allow a cap of 591.57 ODP tonnes. 30 However a 1993 ANZECC funded study which surveyed industry estimated that Australian industry would need a maximum of only 220 ODP tonnes 1996-2000 (with the refrigeration and air conditioning sectors consuming approximately 70%-80% of these HCFCs). 31

A lesser Australian cap of 300 ODP tonnes was endorsed by Cabinet on 24 October 1994 and ANZECC in April 1995. Australia's initial HCFC cap from 1 January 1996 - 31 December 1999 is therefore approximately 1/2 of the limit Australia is allowed under the Montreal Protocol. This smaller limit will affect the subsequent phase-out stages as the reduction rates in these later stages are calculated by a percentage of the initial Australian cap. The smaller cap will allow Australia to meet any revisions to phase-out dates that may be agreed by the Parties to the Montreal Protocol.

The rationale for a lesser cap is that it meets the needs of Australian industry and will be an incentive to industry to prepare for reduced HCFC supply. This will reduce costs and effects on the Australian community. Under a larger cap, industry would not experience HCFC shortages until 2010 or later. Previous experience concerning the setting of the CFC cap showed that the HCFC cap should be matched with demand to effectively reduce HCFC use in Australia. 32 The Australian cap and industry limit will be reviewed every 2 years with the first review proposed in 2000.

A summary of Australia's HCFC reduction targets is:

300 ODP tonnes 1996 3 ODP tonnes 2015 0 ODP 2030.

All the steps in the phase-out are in the table inserted by proposed s.25 of the Bill.

Bill's HCFC licence system

HCFC controlled substance licence

.An HCFC controlled substance licence is required for the manufacture, import or export of HCFCs. Licences are granted within fixed 2 calendar year licence periods.

.HCFC licensees will be required to report quarterly on their manufacture, import and export of HCFCs.

Industry limit

.Industry will self regulate under specified industry wide HCFC industry limits 1996-2030 reaching zero use by 2030.

HCFC quota allocation following 90% of industry limit

.If industry use exceeds 90% (the threshold) of the industry limit an HCFC quota allocation system is activated for licensees for the following two calendar years. The Minister must publish a notice in the Gazette that an HCFC quota period commences for 2 years from 1 January in the year following the year the threshold is exceeded.

.W here an HCFC quota period is activated the indust and export of HCFCs for that period is available only under a quota system. Licensees must apply and be allocated an HCFC quota for that period.

.A licensee's HCFC quota operates until the end of the fixed 2 year HCFC quota period.

. -* A licensee's HCFC quota allocation will licensee's market share of manufacture, import or export in the base year (1993 for the start up of the Bill, or any later calendar year preceeding the commencement of a quota period).

.An HCFC quota may be transferred between licensees provided that the Minister/EPA is notified.

"Top up" of industry limit in exceptional circumstances = Australian cap

.The industry limit may be supplemented by the allocation of reserve HCFC quotas to individual licensees under a specified total reserve HCFC quota limit.

.Individual licensees may apply to the Minister for allocation of a reserve HCFC quota. The industry limit + reserve HCFC quota limit = the Australian cap in that year. eg: for 1 January 1996 - 31 December 1999: industry limit 250 ODP tonnes + reserve HCFC quota limit 50 ODP tonnes = Australian cap 300 ODP tonnes.

.The Minister may allocate a reserve HCFC quota only where specif circumstances exist (eg. use for medical, veterinary, defence or public safety uses; or as the only practicable alternative).

.A reserve HCFC quota may be allocated for periods of up to 1 year.

Fees

HCFC activity fees

.A controlled substances licensee will be required to pay an HCFC activity fee for the manufacture or import of HCFCs, payable at the end of each quarter. The fee is proposed to be set (by regulations) at $2,000 per ODP tonne of HCFCs. The fee increases with the ozone depleting effect of the substance. It is proposed to adjust fees in line with the Consumer Price Index (CPI). 33

Licence administration fees

.A licensee of any of the 3 categories of licences will be required to pay a non-refundable administration fee. This is proposed to be set (by regulations) at $10,000 per HCFC licence period, $2,000 per year for an essential uses licence and $10,000 per year for a used substances licence. 34

At present it is proposed that export of HCFCs from Australia will not be subject to the HCFC activity fees or be a part of the industry limit or licensee quota.

Main Provisions

Clause 3 repeals the Ozone Protection (Licence Fees - Manufacture) Act 1989 and the Ozone Protection (Licence Fees - Imports) Act 1989 (to be replaced with new Bills). The Bill contains transitional provisions maintaining current licence fees and reporting requirements until 1 January 1996.

Definitions

Item 4 of Schedule I inserts new definitions in s.7(1) of the Principal Act including- HCFCs (listed in proposed Part V), HBFCs (listed in proposed Part VI) and methyl bromide (listed in proposed Part VII), all whether existing alone or in a mixture. Recycled stage-1 or stage-2 scheduled substances are collected from machinery, equipment or containers during servicing or disposal and intended to be released after a cleaning process. HCFCs will be measured in ODP tonnage, as in the Montreal Protocol, and methyl bromide and other scheduled substances will be measured in metric tonnes.

Item 5 repeals existing s.8 and inserts a new s.8. New s.8 provides HCFC quota periods commence on 1 January specified by the Minister under proposed s.26 for a period of 2 years unless varied by the Minister. An HCFC quota period will be published in the Gazette and will be a disallowable instrument. Proposed s.8A provides initial licences will be for 2 years from 1 January 1996 to 31 December 1997. Licences issued any time after 1 January 1996 still only operate until 31 December 1997.

Proposed s.8B defines an HCFC quota as the maximum quantity of HCFC ODP tonnes allowed for regulated activities by a licensee during a licence period. A reserve HCFC quota is the maximum HCFC ODP tonnes allowed for regulated activities by a licensee while the HCFC quota stays in force.

Item 10 repeals ss.10, 10A and 11 and inserts a new s.10. Proposed s.10(1) defines ODP tonnage as an HCFC's tonnage x its ODP. Where a substance contains 2 or more HCFCs the ODP quantity is the addition of those HCFCs.

Licensing

Item 17 repeals s.13 and inserts a new ss.13 and 13A. Proposed s.13 prohibits unlicensed manufacture, import or export of HCFCs and methyl bromide unless under one of the 3 categories of licence.

3 categories of licences

. controlled substances licence - for the manufacture, import or export of HCFCs 35 , or methyl bromide 36 (proposed s.13(1), s.13A(2)).

. essential uses licence - for:

- manufacture of specified stage-1 or stage-2 scheduled substances (CFCs, halons, carbon tetrachloride or methyl chloroform) (proposed ss.13(4), 13A(3)(a));

- import or export of specified stage-1 or stage-2 schedule substances (proposed ss.13(5), 13A(3)(b)(c); or

- import of an HBFCs (proposed ss.13(3), 13A(3)(b)).

. used substances licence - for the import or export of recycled or used (waste) stage-1 or stage-2 scheduled substances (proposed ss.13(1)(6), 13A(4)).

The penalty for contravention of any of these requirements is 500 penalty units ($50,000).

Licence applications

Licences will be made on approved forms and may require verification by a statutory declaration. Item 19 omits s.16(1) and (2) and inserts a new s.16(1) and (2). Proposed s.16(2) provides a licence may be granted only where the licence administration fee is paid (proposed to be $10,000 under regulations) or payment has been waived. Item 20 omits s.16(3A) and inserts a new s.16(3A) which provides that an essential uses licence and a used substances licence must specify the substance(s) covered by the licence, activities and maximum quantities for each activity. The Minister in deciding to grant a licence must have regard to Australia's international obligations (under the Montreal Protocol), Commonwealth government policies and other relevant matters.

Item 23 adds two new criteria in s.16(5) that the Minister may take into account to determine whether an applicant is a fit and proper person to hold a licence. These are - whether the person has contravened a condition of a licence and whether the person has had a licence cancelled under s.20.

Licence conditions

Item 25 repeals ss.17A, 18, 18A and 19 and inserts new ss.18, 19, 19A and 19B. New ss.18(1),(2) and (3) specify the conditions of licences:

.a licensee must not engage in a regulated HCFC activity in an HCFC quota period unless allocated an HCFC quota for that period or a reserve HCFC quota;

.the total quantity of HCFCs is not more than the quota; and

.no import from or export to non-Parties to the Montreal Protocol;

The Minister may impose other licence conditions such as - quantity of particular scheduled substances (except HCFCs); prohibiting anything not covered by the licence; specifying the use of particular scheduled substances; and requiring written reports (proposed s.18(6)). The penalty for contravention of a licence condition is 500 penalty units ($50,000) (proposed s.18(7)). The Minister may vary or revoke a licence condition (proposed s.18(8)).

The Minister may terminate a licence for the purpose of giving effect to an adjustment or amendment of the Montreal Protocol (proposed s.19A).

The Minister may transfer a licence on a joint application from the licensee and transferee (proposed s.19B(1)), providing the Minister is satisfied that the transferee is a fit and proper person to be granted a licence and has regard to the criteria in s.16(5)(a)-(g). A decision refusing a licence must state the reasons for the refusal (proposed s.19B). Item 26 inserts a new s.20(1) which provides the Minister may cancel a licence if satisfied that the licensee is no longer a fit and proper person to hold the licence or has contravened a condition of the licence.

Part IV - HCFC Quotas

Item 27 repeals the existing Part IV in the Principal Act and substitutes "Part IV - HCFC Quotas". Proposed s. 24 provides the HCFC industry limit is in a table.

Reserve HCFC quota limits

Proposed s.25 provides the reserve HCFC quota limit is in column 3 of the table.

Proposed s.26 provides how the first HCFC quota period will be activated. This occurs where the total quantity of regulated industry HCFC ODP tonnes is more than 90% of the industry limit (the threshold) for that year. The Minister must then publish a notice in the Gazette -

specifying 1 January of the next year as the start of the first HCFC quota period; stating that licensees require an HCFC quota or HCFC reserve quota; and specifying the base year to be used in allocating HCFC quotas.

Proposed s.27(3) provides that only licensees may apply for an HCFC quota or a reserve HCFC quota. Proposed s.28 empowers the Minister to allocate quotas and determine the size of each quota in accordance with proposed ss.31 and 32. The Minister must have regard to Australia's international obligations, Comonwealth government policies and other relevant matters. Written notice must be provided specifying the size, type and duration of the quota (proposed s.28(5). The Minister must provide written notification and reasons for refusal of an application (proposed s.28(6).

Criteria for allocating reserve HCFC quotas

Proposed s.28(5)(d) provides that a reserve HCFC quota may be allocated in "exceptional circumstances" for periods of up to 1 year. "Exceptional circumstances" exist where use of the particular HCFC is essential for medical, veterinary, defence or public safety purposes and there is no practicable alternative to that use or allocation is required to avoid delay in supply (proposed s.29).

Calculation of HCFC quota allocation

Proposed s.30 provides that an HCFC quota operates until the end of the fixed quota period (2 calendar years) for which it is allocated. The size of an HCFC quota is based on a licensee's market share in the previous calendar year (proposed s.31).

Proposed s.32 a reserve HCFC quota allocated to licensees must not exceed the total HCFC reserve limit for that year (proposed s.25). The Minister may vary or revoke a reserve HCFC quota where the relevant exceptional circumstances have changed or ceased to exist (proposed s.33). A quota ceases when a licence stops being in force or is cancelled (proposed s.34).

General

Items 28-33 replace references to penalties to the equivalent penalty units.

Item 34 repeals the existing reporting requirements in ss.46, 46A, 47 and 47A and inserts a new s.46. New s.46 provides that an HCFC licensee must, within 15 days after a quarter, provide a report specifying quantity of each scheduled substance - manufactured; manufactured for feedstock; imported; imported per country of origin; imported for feedstock; exported; exported per country of destination; and quantity destroyed. Penalty for non compliance is 100 penalty units ($10,000) (new s.46(2)). The penalty for a false statement in a report to the Minister is imprisonment for 2 years (item 43 amending s.62(3)).

Item 50 adds new "Part V - HCFCs", "Part VI - HBFCs" and Part VII - Methyl bromide to the end of Schedule I. These list the chemical formula of substances controlled under the Montreal Protocol and make them scheduled substances under the Principal Act.

Item 51 repeals existing Schedule 3 and substitutes a new Schedule 3 with a consolidated text of the Montreal Protocol incorporating amendments to the Montreal Protocol made by Meetings of the Parties in London 1990, Nairobi 1991 and Copenhagen 1992.

Item 52 inserts provisions at the end of Schedule 4 of the Principal Act which prohibit manufacture and import of certain substances including - halon (mainly in containers also prohibited under proposed s.13), rigid polyurethane foam for packaging or moulded flexible polyurethane foam if containing or produced with stage-1 or stage-2 scheduled substance, non-refillable containers and refrigeration or air conditioning equipment containing CFCs. These are presently covered by regulations 37 but are inserted to consolidate regulation.

Establishment of Ozone Protection Reserve - if Financial Management Acountability Bill

1994 is passed

Item 55, Schedule 1 Part 2 inserts a new Part VIIIA - Ozone Protection Reserve establishing an Ozone Protection Reserve as part of the Reserved Money Fund (proposed s.65B). This Part is operative only if the Financial Management and Accountability Bill commences on or before 1 January 1996 (items 53 and 54). 38

Proposed s.65C requires monies to be paid out of the Consolidated Revenue Fund equal to the amounts received - for licence application fees; as fees under the Ozone Protection (Licence Fees-Manufacture) Acts 1995 and 1989, Ozone Protection (Licence Fees-Imports) Acts 1995 and 1989; as penalties ; and interest earned on such amounts. The purposes of the Reserve are furthering and providing information on HCFC and methyl bromide phase-out programs; administration of the licensing and quota systems; and refunding amounts paid into the Reserve in error (proposed s.65D).

Establishment of Ozone Protection Trust Fund - until commencement of

Financial Management Accountability Act

Item 58, Schedule I Part 3 inserts a new Part VIIIA - Ozone Protection Trust Fund establishing the Ozone Protection Trust Fund. This Part only applies if the Financial Management and Accountability Act does not commence on or before 1 January 1996 (items 56 and 57). Provisions are similar to those in relation to the Ozone Protection Reserve except the Fund is a Fund under 62A of the Audit Act 1901. If the Financial Management Accountability Act commences after 1 January 1996 Part VIIIA will be amended to change the funding arrangements from the Ozone Protection Reserve to the Ozone Protection Fund (Schedule I Part 4).

Licensing transitional provisions

Schedule 2 terminates all licences under the Principal Act from 1 January 1996 when substances covered by such licences will be banned except under essential use licences and used substances licences. Proposed item 4 allows the Minister to receive and determine licence applications as if the proposed changes to the Principal Act had commenced. Licences granted during this transitional period commence on 1 January 1996 (proposed item 5).

Endnotes

1 Manufacture and import of - HCFCs from 1 January 1996 and methyl bromide from 1 January 1995 under the Ozone Protection (HCFC, HBFC and Methyl Bromide) Regulations 1990; and polyurethane foam under the Ozone Protection (Product Control) Regulations 1990.

2 Concluded on 16 September 1987 and entered into force internationally on 1 January 1989. Signed by Australia on 8 June 1988, ratified by Australia on 19 May 1989 and entered into force for Australia on 17 August 1989.

3 Adopted on 22 March 1985 in Vienna. Entered into force internationally on 22 September 1988.

4 Bills Digest Nos. 12 and 13 1995/96.

5 If it was at normal sea level pressure the layer would be approximately 3mm thick. Kemp,D. Global Environmental Issues: A Climatological Approach, London 1990, p.117-8.

6 Stait, B. Chlorofluorocarbons-Do They Affect Stratospheric Ozone?, Current Issues Brief, No. 2, 1987-88, Legislative Research Service, Department of the Parliamentary Library, pp.1-2,4.

7 The amount of ozone over Antarctica has halved in the last 10 years. The ozone hole measured in October 1994 was much deeper and lasting longer into Antarctica's summer. Jones, A.E. Shanklin, J.D. "Continued Decline of Total Ozone over Halley, Antarctica, Since 1985", Nature, Vol. 376, No. 6539, 3 August 1995, p.409.

8 Jones, R. Wigley, T. eds, Ozone Depletion: Health and Environmental Consequences, John Wiley Sons, Chichester, 1989, p.201.

9 World Recources Institute, The 1994 Information Please Environmental Almanac, New York, 1993, p.334.

10 Environmental Protection Authority, HCFC Phase-out in Australia: Protecting the Ozone Layer: EPA Policy Proposals Paper, December 1994, p.2, Haas,P, Keohane,O, Levy,M, Institutions for the Earth: Sources of Effective International Environmental Protection, Masachusetts Institute of Technology, 1993, pp.28-34.

11 Ravishankara, A.R. Albritton, D.L. "Methyl Chloroform and the Atmosphere", Science, Vol. 268, 14 July 1995, p.183.

12 United Nations Environment Program (UNEP), Environmental Data Report 1993-94, Blackwell Publishers, Oxford, 1993, p.13.

13 Australia and New Zealand Environment Conservation Council Report No.30, Revised Strategy for Ozone Protection in Australia 1994, April 1994, p.3.

14 For a summary of HCFC use in Australia see pp. 5-6 HCFC Phase-out Policy Proposals Paper, and Chapter 5 of the Revised Strategy.

15 EPA.

16 ibid., p.4. For a summary of the uses of HCFCs in Australia see pp.5-6, and Chapter 5 Revised Ozone Strategy.

17 EPA.

18 Wright, B. "Towards Food Security Without Chemicals", ECOS, No. 75, Autumn 1993, p.23.

19 Revised Ozone Strategy, op.cit., p.21.

20 Scientific Assessment Panel; Technology and Economics Assessment Panel; and

Environmental Effects Assessment Panel. The Fridjof Nansen Institute, Green Globe Yearbook of International Co-operation on Environment and Development 1993, Oxford University Press, 1993, p.131.

21 Established by the 1992 amendments. The Deputy Director of the EPA, John Whitelaw has been elected as vice chair of the executive committee of the Multilateral Fund.

22 Media Release, 10 July 1994.

23 Revised Ozone Strategy, p.18, Appendix D.

24 EPA, HCFC Phase-out Policy Proposals Paper, op.cit., p.7.

25 Raised at the Open-ended working Group meeting, 8-12 May 1995, Nairobi. UNEP News Release, May 1995.

26 Ozone Protection (Product Control) Regulations.

27 Ozone Protection (HCFC, HBFC and Methyl Bromide) Regulations 1993.

28 Revised Ozone Strategy, op.cit, p.11.

29 HCFC Phase-out Policy Proposal Paper, op.cit., p.10.

30 CFC consumption in 1989 in Australia was 14,293 ODP tonnes. HCFC consumption was 2,699.78 tonnes (all HCFC 22 which has an ODP value of 0.055). The cap allowable under the Montreal Protocol is calculated as 3.1% of 14,293 tonnes + (2,699.78 x 0.055) tonnes = 591.57 ODP tonnes. Revised Ozone Strategy, op.cit., p.19, HCFC Phase-out Policy Proposals Paper, op.cit., p.7.

31 ANZECC and Victorian Environment Protection Agency, Consumption and Emission of Partially Chlorinated Fluorocarbons, October 1993.

32 HCFC Phase-out Policy Proposals Paper, op.cit., pp.8-9.

33 ibid. pp.22-23, for estimates of revenue which will be obtained by fees. Paper, op.

34 EPA.

35 Article 2F(1) Group I Annex C of the Montreal Protocol.

36 Article 2H Annex E of the Montreal Protocol.

37 Under the Ozone Protection (Product Control) Regulations 1990.

38 The Financial Management and Accountability Bill passed the Senate on 23 March 1995, the House of Representatives has agreed to some amendments and disagreed to other amendments and the Bill has been returned to the Senate.

Sarah O'Brien (Ph. 06 277 2433)

Bills Digest Service 10 August 1995

Parliamentary Research Service

This Digest does not have any legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

Commonwealth of Australia 1995.

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Published by the Department of the Parliamentary Library, 1995.