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National Greenhouse and Energy Reporting Amendment Bill 2009

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2008 - 2009

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

NATIONAL GREENHOUSE AND ENERGY REPORTING AMENDMENT BILL 2009

 

 

 

SUPPLEMENTARY EXPLANATORY MEMORANDUM

 

 

 

 

Amendments to be Moved on Behalf of the Government

 

 

 

 

(Circulated by authority of the Minister for Climate Change and Water,

Senator the Honourable Penny Wong)

 

 



AMENDMENTS TO THE NATIONAL GREENHOUSE AND ENERGY REPORTING AMENDMENT BILL 2009

 

OUTLINE

 

This amendment will enable the voluntary transfer of reporting obligations of a facility specified under the National Greenhouse and Energy Reporting Act 2007 (the NGER Act) from a controlling corporation where one member of its group has operational control of the facility to another member of a different corporate group that has financial control of the facility. It is intended that the entity taking on reporting obligations be a constitutional corporation consistent with the current coverage of the NGER Act.

 

The process for the transfer of reporting obligations is to be formalised with the introduction of the ‘Reporting Transfer Certificate’ (RTC) concept. Corporations that have financial control of a facility that is under the operational control of another member of a different controlling corporation and meets specified criteria, may apply to the Greenhouse and Energy Data Officer (the GEDO) for an RTC.

 

All reporting, record keeping obligations and compliance measures under the NGER Act, including reporting of greenhouse gas emissions, energy production and energy consumption data, in relation to the facility for which an RTC is issued are subsequently transferred to the holder of the certificate.

 

The proposed provisions will closely reflect the existing Category B Liability Transfer Certificate (LTC) provisions outlined in the Carbon Pollution Reduction Scheme (CPRS) Bill 2009. By design, this will promote consistency in the terminology, concepts and rules between the existing NGER Act reporting regime and the future CPRS, thereby ensuring a high degree of continuity between current and future reporting arrangements.

 

These provisions will be voluntary, reduce administration and economic costs on industry and increase flexibility in establishing reporting arrangements under the NGER system prior to the deadline for reporting for the first NGER reporting year of 2008-2009.

 

This government amendment to the National Greenhouse and Energy Reporting Amendment Bill 2009 (the NGERS Bill) will also require consequential amendments to deal with specific takeover of functions of the GEDO by Australian Climate Change Regulatory Authority (ACCRA). These amendments involve no new or changed policy in relation to the CPRS.  They are necessary to ensure the NGER Act operates appropriately once the relevant provisions of the Carbon Pollution Reduction Scheme (Consequential Amendments) Act 2009 commence on 1 July 2011.

 

Financial Impact Statement

 

The Amendment will have no financial impact and will introduce specific reporting requirements that will reduce the reporting burden and associated administrative and economic costs for business in advance of the deadline for reporting for the first NGER reporting year of 2008-2009, and future commencement of the CPRS.



NOTES ON CLAUSES

 

Clause 2: Commencement

 

1.       This clause sets out that the provisions of the Bill will commence or be taken to commence according to the table entitled ‘Commencement information’.

 

2.       The measures in sections 1 to 3 are to commence the day after this Act receives Royal Assent.

 

3.       The measures in Schedule 1 are to commence on the 28 th day after the day on which this Act receives the Royal Assent.

 

4.       The measures in Schedule 2, Part 1 are to commence the day after this Act receives Royal Assent.

 

5.       The measures in Schedule 2, Part 2 are to commence on the latter of the commencement of section 3 of the Carbon Pollution Reduction Scheme Act 2009 and immediately after the commencement of Part 1 of Schedule 2 of this Act.

 

6.       The measures in Schedule 2, Part 3 are to commence at the same time as Part 2 of Schedule 1 to the Carbon Pollution Reduction Scheme (Consequential Amendments) Act 2009 .

SCHEDULE 2 - AMENDMENTS RELATING TO REPORTING TRANSFER CERTIFICATES

Part 1 - General Amendments

Item 1 - Section 7

7.       This item defines financial control in accordance with new section 22R, which specifies the requirements for establishing financial control .

Item 2 - Section 7

8.       This item defines interim financial year . The three financial years following commencement of the NGER Act on 1 July 2008 are defined as interim financial years for the purposes of enabling the RTC concept. The RTC concept is a provisional approach that will be in effect for the three financial years (i.e. 2008-2009 to 2010-2011 NGER reporting years) leading up to the beginning of the CPRS. RTCs will be cancelled on 30 June 2011 and corporations with operational and financial control of the RTC facility will need to arrange to apply for a new “Liability Transfer Certificate” (LTC) with the ACCRA as outlined in the CPRS Bill 2009.

Item 3 - Section 7

9.       This item defines reporting transfer certificate in accordance with new section 22L, which gives meaning to the certificate which is issued to the RTC applicant. 

Item 4 - Section 7

10.   This item defines reporting transfer test in accordance with new section 22J, which outlines the criteria to be fulfilled in order for assessment and issuing of an RTC to the applicant. 

Item 5 - At the end of section 13

11.   This item inserts a new subsection 13(3).  The intention of this subsection is that a facility which has an RTC in place will be disregarded for the purpose of determining whether the group thresholds in section 13 of the NGER Act have been met.

Item 6 - After subsection 17(3)

12.   This item inserts a new subsection 17(3A). This amendment requires the GEDO to register a corporation if an RTC has been issued to the corporation and it has not already been registered under Division 3 of the NGER Act. 

Holders of an RTC will also need to be registered under the NGER Act, and will need to come within the definition of 'registered corporation'.

To streamline the registration process and avoid RTC holders from having to apply separately for registration, the GEDO will register them automatically when an RTC is granted. 

Item 7  Subsection 18(3)

13.   This item repeals subsection 18(3) of the NGER Act and replaces it with a new subsection 18(3).  This subsection currently sets out what an application for deregistration must contain and what matters the GEDO must take into account when making a decision to deregister a corporation. The new subsection will require the GEDO to be satisfied that the corporation applying for deregistration is not the holder of a RTC.

Item 8 - At the end of subsection 19(1)

14.   This item inserts new Note 3A in subsection 19(1) to allow reports under section 19 and the new section 22G to be set out in the same document.

Item 9 - Before subsection 19(6)

15.   This item inserts a new subsection 19(5A). The effect of this insertion is that a member of a corporation’s group does not have operational control of a facility for a given day during an interim financial year if another person holds an RTC for that facility on that day.

Item 10 - At the end of section 22

16.   This item inserts a new subsection 22(5). RTC holders have separate reporting and record keeping obligations under Part 3E. Therefore section 22 does not apply to RTC holders.

Item 11 - Before Part 4

17.   This item inserts a new Part 3E - Reporting obligations of holders of reporting transfer certificates.  Several amendments are made in item 11:

 

•                 This item adds a new Division 1 - Reporting obligations.

Specific reporting obligations are required for RTC holders. Current section 19 refers specifically to reporting obligations of controlling corporations, and it’s members with operational control of facilities. RTC holders are also ‘registered corporations’, but they are not necessarily a controlling corporation and are provided with an RTC on the basis that they have financial control .

 

-                This item adds a new section 22G - Report to be given to Greenhouse and Energy Data Officer .

A corporation holding an RTC for all or part of a financial year must report to the GEDO the greenhouse gas emissions, energy production and energy consumption from the operation of that facility during that time in accordance with 22G. Failure to do so may be an offence under Division 137 of the Criminal Code and a non-compliant corporation may be liable for a civil penalty of 2000 penalty units.

Reports required under 22G must be supplied to the GEDO in an approved manner and form. They must be based on methods determined by the Minister under 10(3) or by a method which meets criteria determined by the Minister. Reports under this provision must include any information specified by the regulations for s22G and be provided before the end of 4 months after the end of the interim financial year.

The Regulations may provide different requirements for different circumstances. These may include the requirement for a corporation to provide information to the GEDO that has been requested by a State or Territory for the GEDO to collect.

In relation to a facility, a corporation reporting under 22G(1) for an interim year that does not meet greenhouse gas emissions of a carbon dioxide equivalence of 25 kilotonnes or more, and did not produce 100 terajoules or more of energy, and did not consume 100 terajoules or more of energy, regulations may specify different reporting requirements for a report to be submitted to the GEDO. It is not the intention, when a threshold is not met, to remove all reporting obligations from the RTC holder.

22G(6) allows section 19 and 22G reports to be set out in the same document.

Where no regulations are in force for the purpose of paragraph 2(c) then current regulations for the purpose of 19(6)(c) have effect if they were made for the purpose of 22G(2)(c), the provision in paragraph 2(c) and the regulations are read in reference to a facility to which an RTC relates, and those regulations were otherwise appropriately modified.

 

-                This item adds a new section 22H Records to be kept. 

The RTC holder who is or was required to provide a report under section 22G for an interim financial year must keep records of the corporation’s activities that:

·       allow the corporation to report accurately under section 22G; and

·       enable the GEDO to ascertain whether the corporation has complied with the corporation’s obligations under section 22G.

In line with existing record keeping provisions in the Act, the RTC holder must retain the records for 7 years from the end of the financial year in which the activities take place.

 

•                 This item adds a new Division 2 - Reporting transfer certificates.

 

-                This item adds a new section 22J  Reporting transfer test.

An RTC allows the reporting obligation of a facility to be transferred to a corporation that has financial control of the facility which is under the operational control of another member of a different controlling corporation.

The transferee corporation must be a company registered under Part 2A.2 of the Corporations Act 2001 . The corporation must be a constitutional corporation and not a foreign corporation. The transferee cannot be within the same controlling corporation’s group as the transferor corporation (operator).

Financial control for the purposes of the NGER Act (refer to Clause 22R ), is intended to encompass a corporation that has significant ability to control a facility through financial means only and therefore give effect to decisions relating to greenhouse gas emissions reductions.

The meaning of financial control recognises that more than one person may have financial control over a facility. For example, several persons may be participants in a joint venture or partnership that collectively have financial control of a facility. In these circumstances, the person with the equal or greatest share in the economic benefits from a facility will have financial control for the purposes of the NGER Act.

 

Member Y, which is part of Controlling Corporation A’s group, is the operator of Facility 1. Member F, which is part of Controlling Corporation B’s group, has financial control over Facility 1. Member F (with consent from Corporation A and Corporation B) applies to the GEDO for a reporting transfer certificate.

A certificate is issued and Member F takes on all reporting obligations and liabilities for Facility 1 under the National Greenhouse and Energy Reporting Act 2007 , including reporting in relation to greenhouse gas emissions, energy production and energy consumption. Facility 1 emissions do not count toward Corporation A’s nor Corporation B’s thresholds.

 

-                This item adds a new section 22K - Application for reporting transfer certificate .

An application to obtain a RTC must be made in writing in a form approved by the GEDO. An application by a corporate group member that has financial control of a facility must be accompanied by the written consent of its controlling corporation to take on the reporting obligations established by the NGER Act.

Also, for the applicant to acquire an RTC they must obtain the written consent of the controlling corporation of the transferor that it has agreed to give the applicant such information as necessary for the applicant to comply with obligations that will be imposed on the applicant by the NGER Act in relation to the facility if the certificate is issued.

The application must also include any information and documents that are specified in the form approved by the GEDO.

 

-                This item adds a new section  22KA - Further information .

The GEDO may request further information in relation to an application within a period specified in a notice given by the GEDO. If the applicant does not meet this request within the time specified, the GEDO may refuse to consider the application or refuse to take any action, or any further action, in relation to the application.

 

-                This item adds a new section 22L - Issue of reporting transfer certificate .

After considering the application, the GEDO may issue to the applicant an RTC for a facility on the grounds it has satisfied certain criteria.

The GEDO must be satisfied the applicant passes the RTC transfer test ( Clause 22J ) and it has the capacity and access to the required information to comply with its obligations under the NGER Act.

The threshold criteria ensures that only facilities that are expected to meet the facility level threshold are considered for an RTC. The thresholds for the operation of the facility during an interim year are:

·       emissions of greenhouse gases that have a carbon dioxide equivalence of 25 kilotonnes or more;

·       production of energy of 100 terajoules or more; and

·       consumption of energy of 100 terajoules or more.

The GEDO is required to take all reasonable steps to ensure that a decision is made on an application for a reporting transfer certificate within 90 days of receiving an application or within 90 days of being given further information. The GEDO must inform an applicant in writing if it decides to refuse to issue a RTC.

 

-                This item adds a new section 22M - Duration of reporting transfer certificate .

An RTC comes into force on the day specified in the certificate as the day on which the certificate is to come into force (the start day ). The start day may be earlier than the day on which the certificate is issued, so long as it occurs either in the same financial year as the day on which the certificate is issued, or the financial year preceding the financial year in which the certificate is issued.

The start day may only be earlier than the day on which the certificate is issued if the applicant and the relevant parties consent to the specification of that start day.

An RTC remains in force until the end of 30 June 2011.

 

-                This item adds a new section 22N - Surrender of reporting transfer certificate .

If an RTC holder wishes to surrender a RTC it must obtain written consent from the GEDO to do so. The GEDO must not consent to the surrender unless:

·       where applicable, the controlling corporation(s) that agreed to the making of the application for the certificate agrees to the surrender, and

·       the GEDO is satisfied that there are special circumstances that warrant the giving of its consent to the surrender.

 

-                This item adds a new section 22P - Cancellation of reporting transfer certificate .

The GEDO must, by written notice, cancel an RTC in the following circumstances:

·       if a company ceases to pass the reporting transfer test in relation to the facility concerned;

·       if the corporation has become an externally-administered body corporate (within the meaning of the Corporations Act 2001 ); or

·       if regulations specify one or more other grounds for cancellation and at least one of those grounds is applicable to the company.

The cancellation or surrender of an RTC will result in future obligations and liability returning to the person that would have had obligations and liability in the absence of the RTC.

 

-                This item adds a new section 22Q - Reporting transfer certificate is not transferable .

An RTC is not transferable.

 

-                This item adds a new section 22R - Financial control.

This clause outlines the allowable scenarios for the application of financial control for the purposes of the NGER Act. It is intended to encompass a corporation that has significant ability to control a facility through financial means only and therefore give effect to decisions relating to greenhouse gas emissions reductions. It is not intended to include an agent or person acting on behalf of a corporation that has financial or operational control of a facility who may not have any direct influence on greenhouse gas emissions reductions.

The meaning of financial control recognises that more than one person may have financial control over a facility. For example, several persons may be participants in a joint venture or partnership that collectively have financial control of a facility. In these circumstances, the person with the equal or greatest share in the economic benefits from a facility will have financial control for the purposes of the NGER Act.

Item 12  Before subsection 24(1B) - Publishing of information

18.   This item specifies that the GEDO must publish on a website the scope 1, scope 2, and energy consumption figures from interim financial year reports submitted by the RTC holder. The GEDO may also publish the methods, and ratings to each measure in accordance with those methods under the determination under section 10(3).

This amendment is aligned with existing NGER obligations.

Item 13  Before subsection 24(2) - Publishing information

19.   This item specifies that the GEDO is restricted from publishing certain information where an application has been made under section 25 and has been accepted by the GEDO

This amendment is aligned with existing NGER Act obligations.

Item 14  Subsection 25(1) - Requests for information not to be published

20.   This item specifies that an RTC holdert may apply to request the GEDO not to publish information if it could be demonstrated that the information could be capable of revealing trade secrets or have other negative impacts on matters of commercial value.

Item 15  Before subsection 30(3) - Continuing contraventions

21.   This item imposes a civil penalty of 100 penalty units per day for failing to comply with s22G requirements. This is analogous with standard NGER continuing contraventions.

Item 16  After paragraph 56(d)

22.   An application may be made to the Administrative Appeals Tribunal for the review of a decision of the GEDO to a refusal to issue an RTC, consent to the surrender of an RTC, or cancelling an RTC.

 

Part 2 - Consequential amendments relating to the Australian Climate Change Regulatory Authority

Items 17 to-32 (References to the Greenhouse and Energy Data Officer)

23.   These items will only commence on the commencement of section 3 of the Carbon Pollution Reduction Scheme Act 2009 .

Amendments at Items 17 - 32 omit references to the GEDO  in provisions to be inserted by the parliamentary amendments moved in relation to the NGER Bill 2009, and insert references to the ACCRA. The ACCRA will administer the CPRS, the reporting regime and the renewable energy requirements.  It will be established by the ACCRA Bill 2009. 



 

Part 3 - Consequential amendments relating to publication of information

Item 33 - Paragraphs 24(1AD)(a) and (b)

24.   Item 12 above amends section 24 by inserting subsections 24(1AD) and 24(1AE).  These sections address the matters which the Regulator is required to or may publish in relation to reports by holders of RTCs.

The inserted subsections foreshadow that Regulations will define ‘greenhouse gas emissions that are scope 1 emissions’ and ‘greenhouse gas emissions that are scope 2 emissions’.

This item amends paragraphs 24(1AD)(a) and (b) by omitting references to the Regulations for the meaning of scope 1 and scope 2 emissions. The reason for this amendment is that the combined effect of Items 137-138 and 156-157 of the CPRS (Consequential Amendments) Bill 2009 is that Regulations will be made under section 10 to define scope 1 and scope 2 emissions of greenhouse gas from 1 July 2011.