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Clean Energy Bill 2011

2010-2011

 

The Parliament of the

Commonwealth of Australia

 

HOUSE OF REPRESENTATIVES

 

 

 

 

As read a third time

 

 

 

 

 

 

 

 

 

Clean Energy Bill 2011

 

No.      , 2011

 

 

 

 

 

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.............................................................. 25

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—Emissions from the operation of a landfill facility            64

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

32A....... Exempt landfill emissions................................................................. 64

Division 3—Natural gas                                                                                             66

33.......... Liable entity—supply of natural gas.................................................. 66

35.......... Liable entity—supply of natural gas to a person who quotes the person’s OTN      67

36.......... Liable entity—supply of natural gas to a person who misuses the person’s OTN   70

36A....... Extended meaning of use.................................................................. 71

Division 4—Obligation transfer numbers                                                        72

Subdivision A—Issue of obligation transfer numbers                                     72

37.......... Issue of OTN.................................................................................... 72

38.......... Application for OTN......................................................................... 72

39.......... Further information........................................................................... 72

40.......... Issue of OTN as the result of an application..................................... 73

41.......... Issue of OTN on the Regulator’s own initiative................................ 74

42.......... Surrender of OTN............................................................................. 74

43.......... Cancellation of OTN......................................................................... 74

43A....... Publication of list of OTNs that have been cancelled or surrendered 75

44.......... OTN is not transferable..................................................................... 75

45.......... OTN Register.................................................................................... 75

46.......... Evidentiary provisions...................................................................... 77

47.......... Notification of change of name or address of OTN holder or natural gas supplier   78

Subdivision B—Method of quotation of obligation transfer numbers        79

48.......... Quotation of OTN............................................................................. 79

49.......... Effect of withdrawal of quotation of OTN........................................ 79

50.......... Withdrawal of quotation of OTN if OTN is cancelled or surrendered 80

51.......... Withdrawal of quotation of OTN by OTN holder............................. 80

52.......... Withdrawal of quotation of OTN by agreement................................ 80

53.......... Validation of quotation of OTN........................................................ 81

54.......... Effect of surrender or cancellation of OTN—grace period for quotation in relation to a single supply    82

55.......... Effect of surrender or cancellation of OTN—grace period for quotation in relation to a class of supplies               82

Subdivision C—Quotation of obligation transfer numbers                           83

55A....... Large gas consuming facility............................................................. 83

55B....... Quotation of OTN—large gas consuming facility............................. 84

56.......... Quotation of OTN—large user of natural gas................................... 84

57.......... Quotation of OTN—use of natural gas as a feedstock...................... 86

58.......... Quotation of OTN—use of natural gas in manufacturing compressed natural gas, liquefied natural gas or liquid petroleum gas.................................................................................... 87

58A....... Extended meaning of use.................................................................. 88

Subdivision D—General provisions                                                                     89

59.......... Acceptance of quotation of OTN in relation to a single supply......... 89

60.......... Acceptance of quotation of OTN in relation to a class of supplies.... 90

62.......... False or misleading declaration......................................................... 92

63.......... Misuse of OTN................................................................................. 92

64.......... Quotation of bogus OTN.................................................................. 93

Division 5—Designated joint ventures                                                               95

Subdivision A—Mandatory designated joint venture                                      95

65.......... Mandatory designated joint venture.................................................. 95

66.......... Notification....................................................................................... 95

Subdivision B—Declared designated joint venture                                          98

67.......... Joint venture declaration test............................................................. 98

67A....... Relevant operator.............................................................................. 98

68.......... Application for declaration................................................................ 98

69.......... Further information........................................................................... 99

70.......... Making of declaration....................................................................... 99

71.......... Duration of declaration.................................................................... 101

71A....... Notification..................................................................................... 102

72.......... Revocation of declaration................................................................ 102

Subdivision C—Participating percentage determination                             103

73.......... Provisional application for participating percentage determination.. 103

74.......... Application for participating percentage determination.................... 104

75.......... Further information......................................................................... 104

76.......... Participating percentage determination made in response to an application               105

77.......... Participating percentage determination made on the Regulator’s own initiative        106

78.......... Criteria for making participating percentage determination.............. 106

78A....... Duration of determinations.............................................................. 108

79.......... Replacement determinations............................................................ 109

Division 6—Liability transfer certificates                                                      110

Subdivision A—Transfer of liability to another member of a corporate group            110

80.......... Corporate group transfer test........................................................... 110

81.......... Application for liability transfer certificate...................................... 110

82.......... Further information......................................................................... 111

83.......... Issue of liability transfer certificate.................................................. 111

Subdivision B—Transfer of liability to a person who has financial control of a facility            112

84.......... Financial control transfer test.......................................................... 112

85.......... Application for liability transfer certificate...................................... 113

86.......... Further information......................................................................... 114

87.......... Issue of liability transfer certificate.................................................. 114

Subdivision C—Other provisions                                                                        116

88.......... Duration of liability transfer certificate............................................ 116

89.......... Surrender of liability transfer certificate.......................................... 117

90.......... Cancellation of liability transfer certificate....................................... 118

91.......... Liability transfer certificate is not transferable................................. 120

92.......... Financial control.............................................................................. 120

Division 7—Opt-in Scheme                                                                                     122

92A....... Opt-in Scheme................................................................................ 122

92B....... Reduction of provisional emissions number................................... 124

92C....... Reporting requirement..................................................................... 124

92D....... Record-keeping requirement........................................................... 124

92E........ Other matters................................................................................... 125

92F........ Ancillary or incidental provisions................................................... 125

92G....... Commissioner of Taxation and Chief Executive Officer of Customs to be notified of declaration           125

Part 4—Carbon units                                                                                                       127

Division 1—Introduction                                                                                         127

93.......... Simplified outline............................................................................ 127

Division 2—Issue of carbon units                                                                        128

94.......... Issue of carbon units....................................................................... 128

95.......... Identification number...................................................................... 128

96.......... Vintage year.................................................................................... 128

97.......... When carbon units may be issued................................................... 128

98.......... How carbon units are to be issued.................................................. 128

99.......... Circumstances in which carbon units may be issued....................... 129

100........ Issue of carbon units for a fixed charge.......................................... 129

100A..... Extension of issue period................................................................ 134

101........ Limit on issue of carbon units......................................................... 135

102........ Carbon units—total number............................................................ 135

Division 3—Property in, and transfer of, carbon units                           137

103........ A carbon unit is personal property.................................................. 137

103A..... Ownership of carbon unit............................................................... 137

104........ Transfer of carbon units.................................................................. 137

105........ Transmission of carbon units by assignment.................................. 138

106........ Transmission of carbon units by operation of law etc..................... 139

107........ Transfer of carbon units to another Registry account held by the transferor             141

108........ Outgoing international transfers of carbon units............................. 141

109........ Incoming international transfers of carbon units............................. 143

109A..... Registration of equitable interests in relation to a carbon unit.......... 143

110........ Equitable interests in relation to a carbon unit................................. 143

Division 4—Auctions of carbon units                                                                145

111........ Issue of carbon units as the result of an auction.............................. 145

112........ Secondary market auctions of relinquished carbon units................. 148

113........ Policies, procedures and rules for auctioning carbon units.............. 148

114........ Benchmark average auction charge................................................. 150

Division 5—Special provisions relating to free carbon units               152

115........ Cancellation of certain unused free carbon units............................. 152

116........ Buy-back of certain free carbon units.............................................. 152

116A..... Extension of buy-back period......................................................... 153

Part 5—Emissions number                                                                                            155

117........ Simplified outline............................................................................ 155

118........ Emissions number........................................................................... 155

119........ Assessment of emissions number—incorrect report given by liable entity               155

120........ Assessment of emissions number—no report given by liable entity 157

Part 6—Surrender of eligible emissions units                                                    160

Division 1—Introduction                                                                                         160

121........ Simplified outline............................................................................ 160

Division 2—How eligible emissions units are surrendered                   162

122........ How eligible emissions units are surrendered................................. 162

123........ Surrender restrictions...................................................................... 164

124........ Charge on surrender of eligible international emissions units......... 165

Division 3—Unit shortfalls                                                                                      166

Subdivision A—Fixed charge years                                                                   166

125........ Provisional unit shortfall................................................................. 166

126........ Interim emissions number............................................................... 168

127........ Adjustment of total interim emissions numbers.............................. 170

128........ Final unit shortfall........................................................................... 171

129........ Estimation error unit shortfall.......................................................... 174

130........ Remission of unit shortfall charge imposed on estimation error unit shortfall          176

131........ Surplus and estimation error adjustment number............................ 177

132........ Refund—surplus surrender............................................................. 179

Subdivision B—Flexible charge years                                                               179

133........ Unit shortfall................................................................................... 179

Division 4—Unit shortfall charge                                                                       184

134........ When unit shortfall charge becomes due and payable..................... 184

134A..... Remission of unit shortfall charge—voluntary disclosure by liable entity of incorrect emissions number               184

135........ Late payment penalty....................................................................... 187

136........ Recovery of unit shortfall charge and late payment penalty............. 188

137........ Set-off............................................................................................. 188

138........ Liability transfer certificate—statutory guarantee............................ 189

140........ Refund of overpayments................................................................. 190

Division 5—Assessment of unit shortfall and unit shortfall charge 191

141........ Assessment of unit shortfall and unit shortfall charge..................... 191

Division 6—Extension of surrender deadline                                               193

142........ Extension of surrender deadline...................................................... 193

Part 7—Jobs and Competitiveness Program                                                     195

Division 1—Introduction                                                                                         195

143........ Aim and objects.............................................................................. 195

144........ Simplified outline............................................................................ 196

Division 2—Formulation of the Jobs and Competitiveness Program 198

145........ Jobs and Competitiveness Program................................................ 198

146........ Relinquishment requirement............................................................ 199

147........ Reporting requirement..................................................................... 199

148........ Record-keeping requirement........................................................... 200

149........ Other matters................................................................................... 200

150........ Ancillary or incidental provisions................................................... 201

Division 3—Compliance with reporting and record-keeping requirements under the Jobs and Competitiveness Program                                                            202

151........ Compliance with reporting and record-keeping requirements......... 202

Division 4—Special information-gathering powers                                  203

152........ Minister may obtain information..................................................... 203

153........ No assistance for 2 eligible financial years if corporation refuses or fails to comply with request for information  204

154........ Disclosure of information to the Regulator..................................... 204

Division 5—Productivity Commission inquiries                                         206

155........ Productivity Commission inquiries................................................. 206

156........ Matters to which the Productivity Commission must have regard.. 207

157........ Report of inquiry............................................................................. 210

158........ No limit on Productivity Minister’s powers.................................... 211

Part 8—Coal-fired electricity generation                                                              212

Division 1—Introduction                                                                                         212

159........ Object.............................................................................................. 212

160........ Simplified outline............................................................................ 212

Division 2—Issue of free carbon units in respect of generation complexes         214

161........ Issue of free carbon units in respect of generation complexes......... 214

Division 3—Certificate of eligibility for coal-fired generation assistance             219

162........ Application for certificate of eligibility for coal-fired generation assistance              219

163........ Form of application......................................................................... 220

164........ Further information......................................................................... 220

165........ Issue of certificate of eligibility for coal-fired generation assistance 221

166........ Criteria for issuing certificate of eligibility for coal-fired generation assistance        222

167........ Annual assistance factor.................................................................. 223

168........ Emissions intensity......................................................................... 224

Division 4—Power system reliability                                                                225

169........ No assistance if generation complex does not pass the power system reliability test                225

170........ Power system reliability test............................................................ 225

171........ Replacement capacity...................................................................... 228

172........ Nomination of generation units....................................................... 231

173........ Validity of nomination.................................................................... 234

174........ Anticipatory certification—reduction in nameplate rating............... 234

175........ Anticipatory certification—cessation of registration as a generator 236

176........ Intermediary registered as a generator............................................. 237

Division 5—Clean Energy Investment Plans                                                238

177........ No assistance unless Clean Energy Investment Plan given............. 238

178........ Clean Energy Investment Plan........................................................ 238

179........ Copy of Clean Energy Investment Plan to be given to the Regulator 239

180........ Publication of Clean Energy Investment Plan................................. 239

Division 6—Closure contracts                                                                              240

181........ Restrictions on assistance if closure contract has been entered into. 240

181A..... Exemptions from power system reliability test and Clean Energy Investment Plan  241

Part 9—Publication of information                                                                         242

Division 1—Introduction                                                                                         242

182........ Simplified outline............................................................................ 242

Division 2—Information about liable entities                                               243

183........ Liable Entities Public Information Database.................................... 243

184........ Liable entities to be entered in the Information Database................. 243

185........ Emissions number to be entered in the Information Database......... 244

186........ Estimate of total of emissions numbers to be entered in the Information Database   244

187........ Unit shortfall to be entered in the Information Database................. 245

188........ Unpaid unit shortfall charge to be entered in the Information Database 246

189........ Number of surrendered eligible emissions units to be entered in the Information Database     247

190........ Relinquishment requirement to be entered in the Information Database 247

191........ Unpaid administrative penalty to be entered in the Information Database 248

192........ Number of relinquished units to be entered in the Information Database 249

193........ Correction and rectification of the Information Database................ 249

Division 3—Information about holders of Registry accounts             251

194........ Information about holders of Registry accounts.............................. 251

Division 4—Information about units                                                                 252

195........ Information about auction results—general..................................... 252

196........ Information about auction results—last 6 months........................... 252

197........ Information about issue of carbon units for a fixed charge............. 254

198........ Information about issue of free carbon units................................... 255

199........ Quarterly reports about issue of free carbon units........................... 255

200........ Information about surrender of borrowed and banked eligible emissions units        256

201........ Information about total emissions numbers and unit shortfalls....... 256

202........ Publication of concise description of the characteristics of carbon units.. 257

Division 5—Information about relinquishment requirements for persons other than liable entities     258

203........ Information about relinquishment requirements.............................. 258

204........ Information about unpaid administrative penalties.......................... 259

205........ Information about number of relinquished units............................. 259

Division 6—Information about designated large landfill facilities    261

206........ Publication of list of designated large landfill facilities.................... 261

Part 10—Fraudulent conduct                                                                                      262

207........ Simplified outline............................................................................ 262

208........ Units issued as a result of fraudulent conduct—court may order relinquishment     262

Part 11—Relinquishment of carbon units                                                           265

Division 1—Introduction                                                                                         265

209........ Simplified outline............................................................................ 265

Division 2—How carbon units are relinquished                                          266

210........ How carbon units are relinquished.................................................. 266

211........ Deemed relinquishment................................................................... 267

Division 3—Compliance with relinquishment requirements                269

212........ Compliance with relinquishment requirements................................ 269

213........ Late payment penalty....................................................................... 271

214........ Recovery of penalties...................................................................... 272

215........ Set-off............................................................................................. 272

216........ Refund of overpayments................................................................. 273

Part 12—Notification of significant holding of carbon units                   274

217........ Simplified outline............................................................................ 274

218........ Notification of significant holding of carbon units—controlling corporation of a group          274

219........ Notification of significant holding of carbon units—non-group entity 277

Part 13—Information-gathering powers                                                              280

220........ Simplified outline............................................................................ 280

221........ Regulator may obtain information or documents............................. 280

222........ Copying documents—compensation............................................... 281

223........ Copies of documents....................................................................... 281

224........ Regulator may retain documents..................................................... 282

225........ Self-incrimination............................................................................ 282

Part 14—Record-keeping requirements                                                               284

226........ Simplified outline............................................................................ 284

227........ Record-keeping requirements—general.......................................... 284

228........ Record-keeping requirements—quotation of OTN......................... 285

Part 15—Monitoring powers                                                                                       287

Division 1—Simplified outline                                                                               287

229........ Simplified outline............................................................................ 287

Division 2—Appointment of inspectors and issue of identity cards 288

230........ Appointment of inspectors.............................................................. 288

231........ Identity cards................................................................................... 288

Division 3—Powers of inspectors                                                                        290

Subdivision A—Monitoring powers                                                                   290

232........ Inspector may enter premises by consent or under a warrant.......... 290

233........ Monitoring powers of inspectors.................................................... 290

234........ Persons assisting inspectors............................................................ 293

Subdivision B—Powers of inspectors to ask questions and seek production of documents          293

235........ Inspector may ask questions and seek production of documents.... 293

236........ Self-incrimination............................................................................ 294

Division 4—Obligations and incidental powers of inspectors              296

237........ Consent........................................................................................... 296

238........ Announcement before entry under warrant..................................... 296

239........ Inspector to be in possession of warrant......................................... 296

240........ Details of warrant etc. to be given to occupier................................. 297

241........ Expert assistance to operate electronic equipment........................... 297

242........ Compensation for damage to electronic equipment......................... 298

Division 5—Occupier’s rights and responsibilities                                    300

243........ Occupier entitled to observe execution of warrant........................... 300

244........ Occupier to provide inspector with facilities and assistance............ 300

Division 6—Monitoring warrants                                                                       301

245........ Monitoring warrants....................................................................... 301

Division 7—Powers of magistrates                                                                    303

246........ Powers of magistrates..................................................................... 303

Part 16—Liability of executive officers of bodies corporate                    304

247........ Simplified outline............................................................................ 304

248........ Civil penalties for executive officers of bodies corporate................ 304

249........ Reasonable steps to prevent contravention...................................... 305

Part 17—Civil penalty orders                                                                                      306

250........ Simplified outline............................................................................ 306

251........ References to Court......................................................................... 306

252........ Civil penalty orders......................................................................... 306

253........ Who may apply for a civil penalty order......................................... 308

254........ Two or more proceedings may be heard together............................ 308

255........ Time limit for application for an order............................................. 308

256........ Civil evidence and procedure rules for civil penalty orders............. 308

257........ Civil proceedings after criminal proceedings................................... 308

258........ Criminal proceedings during civil proceedings............................... 308

259........ Criminal proceedings after civil proceedings................................... 309

260........ Evidence given in proceedings for a civil penalty order not admissible in criminal proceedings              309

261........ Mistake of fact................................................................................ 309

262........ State of mind................................................................................... 310

263........ Continuing contraventions.............................................................. 311

Part 18—Infringement notices                                                                                    313

264........ Simplified outline............................................................................ 313

265........ When an infringement notice can be given...................................... 313

266........ Matters to be included in an infringement notice............................. 313

267........ Amount of penalty.......................................................................... 314

268........ Withdrawal of an infringement notice............................................. 314

269........ What happens if the penalty is paid................................................. 314

270........ Effect of this Part on civil penalty proceedings............................... 315

271........ Regulations..................................................................................... 315

Part 19—Offences relating to unit shortfall charge and administrative penalties               316

Division 1—Introduction                                                                                         316

272........ Simplified outline............................................................................ 316

Division 2—Offences relating to unit shortfall charge                            317

273........ Scheme to avoid existing liability to pay unit shortfall charge......... 317

274........ Scheme to avoid future liability to pay unit shortfall charge............ 319

Division 3—Offences relating to administrative penalties                    322

275........ Scheme to avoid existing liability to pay administrative penalty...... 322

276........ Scheme to avoid future liability to pay administrative penalty......... 324

Part 20—Enforceable undertakings                                                                        327

277........ Simplified outline............................................................................ 327

278........ Acceptance of undertakings............................................................ 327

279........ Enforcement of undertakings.......................................................... 327

Part 21—Review of decisions                                                                                       329

280........ Simplified outline............................................................................ 329

281........ Reviewable decisions...................................................................... 329

282........ Applications for reconsideration of decisions made by delegates of the Regulator   331

283........ Reconsideration by the Regulator.................................................... 332

284........ Deadline for reconsideration........................................................... 332

285........ Review by the Administrative Appeals Tribunal............................. 332

286........ Stay of proceedings for the recovery of unit shortfall charge or late payment penalty              333

Part 22—Reviews by the Climate Change Authority                                   335

Division 1—Simplified outline                                                                               335

287........ Simplified outline............................................................................ 335

Division 2—Periodic reviews of this Act and the associated provisions                 336

288........ Periodic reviews of this Act and the associated provisions to be conducted by the Climate Change Authority        336

289........ Periodic reviews of the level of carbon pollution caps etc............... 338

290........ Updated review of the level of the carbon pollution cap for 2020-21 340

291........ Periodic reviews of progress in achieving Australia’s emission reduction targets and national carbon budget        341

292........ Report of review............................................................................. 342

Division 3—Other reviews                                                                                      344

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............................................................... 344

294........ Report of review............................................................................. 346

Part 23—Miscellaneous                                                                                                   348

295........ Miscellaneous functions of the Regulator....................................... 348

296........ Computerised decision-making....................................................... 349

297........ Regulator’s power to require further information............................ 349

297A..... Actions may be taken by an agent of a person................................ 350

298........ Delegation by the Minister.............................................................. 351

299........ Delegation by a State Minister or a Territory Minister.................... 351

300........ Delegation by the Secretary............................................................. 351

301........ Concurrent operation of State and Territory laws............................ 352

302........ Law relating to legal professional privilege not affected.................. 352

303........ Arrangements with States and Territories....................................... 352

303A..... Contracts and arrangements to protect energy security.................... 353

303B..... Loans to owners etc. of emissions-intensive coal-fired generation complexes         354

304........ Liability for damages....................................................................... 355

305........ Executive power of the Commonwealth.......................................... 356

306........ Notional payments by the Commonwealth...................................... 356

307........ Alternative constitutional basis........................................................ 356

308........ Compensation for acquisition of property....................................... 359

309........ Prescribing matters by reference to other instruments..................... 360

310........ Administrative decisions under the regulations............................... 360

311........ Transitional—definitions................................................................. 360

312........ Regulations..................................................................................... 361

 



This Bill originated in the House of Representatives; and, having this day passed, is now ready for presentation to the Senate for its concurrence.

B.C. WRIGHT

Clerk of the House of Representatives

House of Representatives

12 October 2011

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

The Parliament of Australia enacts: