Are you ready for the commencement of Australia's Carbon Scheme?

Australia will have a carbon price from 1 July 2012, introduced under the Government’s Carbon Price Mechanism (CPM).  The CPM is based on a cap-and-trade emissions trading scheme and will require liable entities to report on their emissions and surrender a carbon permit for each tonne of CO2-e pollution they produce. If you are involved in an unincorporated joint venture (JV) you need to be aware of the specific rules which regulate the carbon liability of the JV participants.

Default Position

The default CPM position is that the JV operator/manager, as the entity with operational control of the facility, is the liable entity for carbon emissions. It is also the default recipient of compensation, for example for trade-exposed JVs.

This will bring the current terms of the JV agreement into sharp focus, for example the operator’s carbon obligations, the ability to recover carbon costs from joint venturers and the treatment of free permits.

Working out which JV applies to you

The CPM recognises 2 types of alternative unincorporated joint ventures – “Declared designated joint ventures” and “Mandatory designated joint ventures”. We have prepared the following table to help you understand the characterisation of your JV.

Click here to view table.

Operational Control” means having the authority to introduce and implement operating, health & safety, and environmental policies for the facility. Where two or more parties have such authority, the party with the greatest authority has operational control.

What do you need to do?

Click here to view table.

A “Participating Percentage Determination” allocates carbon liability between joint venturers and can be based on ownership interests, percentage of income, etc.