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Ozone Protection Amendment Bill 1998
Bills Digest No. 95 1998-99
This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Oth er sources should be consulted to determine the subsequent official status of the Bill.
Ozone Protection Amendment Bill 1998
â¢ ensure that separate authorisation be provided for manufacturing, importing and exporting activities when issuing a controlled substances licence
â¢ allow conditions to be attached to a licence relating to the import, export or manufacture of hydrochloroflurocarbons
â¢ update the Schedules of the Act in accordance with international developments, and
â¢ narrow the exemption for refrigerated transport containers which contain controlled substances so that only their import, and not their manufacture, is permitted in Australia.
The earth's atmosphere, which can be thought of as a thin skin surrounding the globe, is composed of three distinct layers comp rising the troposphere (0 to 15km), the stratosphere (15 to 50km) and the mesosphere (50 to 70km). The ozone layer consists of a layer rich in ozone (O 3 ) molecules contained in a wide band within the stratosphere some 35 to 40km above the earth's surface.
The ozone layer in the stratosphere is particularly important to human existence as it shields the globe against various wavelengths of ultraviolet (UV) light that can induce skin cancer and retina damage in humans and is also dangerous to many other life forms. It is formed by the action of UV radiation on molecules of oxygen (O 2 ). Once formed, ozone absorbs UV.
In an unmodified atmosphere (similar to what existed in pre-industrial times), ozone was almost non-existent in the troposphere, but reached a much higher concentration in the stratosphere. Stratospheric ozone started forming about 3000 million years ago as a result of the release of oxygen into the atmosphere by living things—a by-product of photosynthesis of millions of single cells in the sea. 1 Ozone now also occurs within certain sections of the troposphere, dominantly within high-density urban and large city environments. The ozone in the troposphere does not have any beneficial attributes as it does in the stratosphere. On the contrary, along with many other pollutants such as nitrous and sulphur dioxides and various forms of particulate matter, the ozone in the troposphere creates serious environmental and health related problems. Within city smog, ozone forms from the joining of atomic oxygen given off with the breakdown of nitrous oxide with free oxygen molecules. It is a poisonous gas, and although only constituting a fraction of designated greenhouse gases, ozone is a particularly potent greenhouse gas. (An increase in greenhouse gases results in increased retention of radiative energy, increasing global warming or the ‘greenhouse effect’).
The ozone in the stratosphere, known as the ozone layer, appears to have been declining since about 1960. But ozone loss ha s become more rapid since about 1978. The reduction is greatest above the Polar Regions, especially Antarctica. The decline is not constant, being greatest at the beginning of spring, as the sun first appears after the long, dark Antarctic winter. Although the result is called a 'hole', it is rather a fall in concentration of stratospheric ozone gas. 2
Naturally occurring substances and emissions such as sulphates and chlorine given off during volcanic eruptions are responsible in part for ozone destruction in the ozone layer. Large volcanoes can spew a huge volume of ozone depleting gases from below gro und high into the atmosphere.
However, it is human made gases, principally chlorofluocarbons (CFCs) and halons, following eventual escape into the stratosphere which are particularly destructive of the ozone layer. These CFCs contain chlorine and the halons contain bromine. Chlorine and bromine attack ozone and break it down. The process is very destructive because a catalytic process is involved leading to one chlorine atom being responsible for the destruction of up to 100 000 ozone molecules. 3
CFCs were found to be useful for a variety of industrial applications. They are usually referred to by a number (eg CFC-11 was a particularly common one), and there are many different types. They were widely used as coolants in refrigeration and air-conditioning equipment, being components of the compressed gas that is pumped around in the tubes in the refrigerator or air conditioner unit, carrying heat from within the fridge or car to the outside. CFCs were also widely used in the manufacture of foam.
Other common industrial solvents such as carbon tetrachloride (CCl 4 ) and methylchloroform (CH 3 CCl 3 ) can also enter the stratosphere and contribute to the chlorine load. Bromine too can participate in reactions that break down ozone. Compounds containing bromine have industrial applications and are used in some fire extinguishers. Methyl bromide (CH 3 Br) is widely used in pest control and soil treatment and has recently been identified as another important ozone-depleting compound.
The Vienna Convention for the Protection of the Ozone Layer and the Montreal Protocol on Substances that Deplete the Ozone Layer provide an international legal framework for addressing concerns regarding the adverse impact of certain substances on the ozone layer.
The Convention was agreed to in March 1985 and has been ratified by 165 countries including Australia. The Montreal Protocol, finalised in September 1987 and ratified by Australia on 19 May 1989, established a mandatory timetable for the phase out of ozone depleting substances. The main gases of concern when the Montreal Protocol was agreed to were CFCs and halons. The result was that the Montreal Protocol dealt with the reduction in use of five CFCs and a freeze on the consumption of three halons. When the Montreal Protocol was signed it was expected that a range of CFC substitutes would be readily available. However, some of these, such as the hydrofluorocarbons (HCFCs), while less damaging than CFCs, still result in the destruction of ozone. Accordingly, a phase out timetable for HCFCs was introduced in the 1990 London Amendment to the Montreal Protocol. The 1992 Copenhagen Amendment amended the Montreal Protocol to set phase out targets for methyl bromide. Currently the Montreal Protocol requires all developed countries to cease bulk consumption of methyl bromide and HCFCs by 2005 and 2020 respectively.
Under Article 4 of the Montreal Protocol, ozone depleting substances are available for trade only amongst those nations that are party to the Protocol. Presently chlorofluocarbons (CFCs), halons, carbon tetrachloride and methyl chloroform are covered by Article 4 trade measures. Recent amendments to the Montreal Protocol (17 September 1997), require parties who accede to it to add the chemical methyl bromide to the existing Article 4 trade measures.
To meet Australia's obligations under the Vienna Convention for the Protection of the Ozone Layer and the Montreal Protocol, the Commonwealth passed the Ozone Protection Act 1989 (‘the Act’), which was significantly amended by the Ozone Protection Amendment Act 1995 . This legislation:
â¢ prohibits the import, export or manufacture of CFCs, halons, carbon tetrachloride, methyl chloroform and hydrobromo chlorofluorocarbons (HBCFs) from 1 January 1996 without an essential uses or used-substance licence
â¢ established a system of controlled substances licences and reporting requirements for the import, export or manufacture of HCFCs and methyl bromide
â¢ introduced two-yearly administrative fees for licences with the fees set under the Ozone Protection Regu lations
â¢ established an Ozone Protection Trust Fund to allow revenue from the licensing schemes to be directed towards the cost of its administration, and industry awareness programs for the phase-out of HCFCs and methyl bromide. 4
Pursuant to amendments t o the Protocol, all licences originally granted under the Act were cancelled on 1 January 1996 and new licences were granted. 5
Current Status of Australia’s Phase Out of HCFCs and Methyl Bromide
Australia achieved a total phase out of CFCs, carbon tetrachl oride and methyl chloroform and hydrobromofluorcarbons in 1995. Halons were phased out in 1992, a year ahead of Montreal Protocol requirements. In regard to HCFCs and methyl bromide, Australia froze consumption of HCFCs from 1 January 1996 to 1989 levels and the consumption of methyl bromide from 1 January 1995 to 1991 levels.
As noted in the Second Reading Speech, Australia’s efforts were formally recognised in 1997 through the award of a Certificate of Appreciation to the Australian Government by the United Nations Environment Program in a ceremony to mark the 10 th anniversary of the Montreal Protocol.
Item 1 (consequential to Item 5 ) amends the definition of ‘ controlled substances licence ’ from one which allows the licensee to ‘import, export and manufacture HCFCs or methyl bromide’ (emphasis added) to one which permits separate authorisation for the processes of manufacture, importation and export control.
Item 2 amends the definition of ‘ essential uses licence ’ from one that allows ‘the licensee to import, export or manufacture’ specific substances for essential use to a definition that makes clear that these activities can be separately authorised as set out in section 13A(3) of the Act.
Item 4 amends the definition of ‘ used substances licence ’ from one that ‘allows the licensee to import or export’ certain substances to a definition that makes clear that these activities can be separately authorised as set out in section 13A(4) of the Act.
Item 5 repeals current subsection 13A(2), which states that ‘the controlled substance licence allows the licensee to manufacture, import and export HCFCs or methyl bromide’ (emphasis added). In other words, subsection 13A(2) currently grants an automatic right to manufacture HCFCs or methyl bromide if one has an import or export licence (currently no manufacture of these substances takes place in Australia). This definition is replaced with one that makes clear that the activities of manufacturing, importing or exporting must be separately authorised by the licence.
The Explanatory Memorandum provides detailed reasons for this amendment, including:
â¢ it will align section 13A(2) with section 13(1) which states that one needs a licence to manufacture, i mport OR export the controlled substances
â¢ as there are currently no manufacturing facilities in Australia for HCFCs or methyl bromide, the amendment will ensure that the Government controls the establishment of such facilities ensuring proper assessment of their impact on the community
â¢ tighter control on any future manufacturing will make it more certain Australia will reach agreed targets for phase out of the controlled substances.
Item 7 allows conditions to be attached to a licence relating to the import, export or manufacture of HCFCs.
Currently, HCFC is the only substance regulated by the Act upon which the Minister may not impose a condition restricting the quantity imported, exported or manufactured. The reason for this exceptional status was that HCFCs in certain circumstances become subject to import limitation through a quota system. In 1997, Australia exceeded its country cap for the import, export or manufacture of HCFCs, triggering the quota system that began on 1 January 1999. Quotas are allocated for a period of two years and generally quota allocation will be based on licensee activity in the penultimate calender year prior to the new quota period. Therefore, it would be in the commercial interests of all licensees to import their quota in the first year of the quota period. Concerns have been raised that this would ‘cause an irregular cyclical pattern phase out program for HCFCs’, and the proposed amendment seeks to allay these concerns. 6
(It should be noted that as the other reasons provided in the Explanatory Memorandum for this amendment are linked to licensee activity in 1998, those reasons are now redundant).
Item 10 repeals sections 42 and 43 of the Act relating to import and export of ‘scheduled substances’ (specific substances listed in the Act’s schedules), as these duplicate the effect of subsections 18(2) and (3).
Item 11 allows the Minister to delegate to a Senior Executive Service officer the power to require an applicant for a licence to give further information. (A range of other powers is currently delegated to a SES officer pursuant to section 76A.)
Item 12 updates the Act’s Schedules relating to the Montreal Protocol in accordance with adjustment agreed to by Parties in 1995 and 1997. The amendments generally relate to production and consumption levels of controlled substances, including methyl bromide, and establishment of relevant licensing systems (which Australia already has).
Item 13 amends Schedule 4 of the Act so that an exemption regarding import and manufacture of refrigerated transport containers containing CFCs is narrowed to only apply to their import. This proposed amendment acknowledges that whilst Australia does not manufacture CFC-dependent transport containers, the global shipping industry still relies to some extent on the existing fleet of these containers.
The Explanatory Memorandum states that the amendments reflect agreed solutions to issues encountered by industry, government and non-g overnment environmental stakeholders in processing Australia's phase out of ozone depleting substances. 7
The drafters of the Explanatory Memorandum are to be commended for the very useful detail provided concerning the background and development of the key amendments.
Krysti Guest and Michael Roarty
27 January 1999
Bills Digest Service
Information and Research Services
This paper has been prepared for general distributi on to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document. IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.