Now that the new financial year is underway, organisations should be aware of the impact of Federal environmental regulatory changes that may affect their business in 2014/2015.
On the agenda for 2014/2015 is the repeal of national climate change regulation (generally called “the carbon tax”) and replacement of this scheme with a new emissions reduction fund (ERF). Being aware of the changes flowing from this and catering for them could give you a competitive advantage, particularly for organisations which could profit from participation in the new ERF and for those who may be exposed to a risk of penalties if they fail to comply with applicable rules.
Regulatory risk: compliance with carbon pricing
The key change for business is the repeal of the clean energy legislation that underpins the carbon tax.
On repeal, organisations will no longer have to comply with the purchase and acquittal of emissions credits under the carbon tax scheme. In addition, the industry assistance provided under the Jobs & Competitiveness Program, the Energy Security Fund and the Steel Transformation Plan will cease.
However, as the repealing legislation is intended to have retrospective effect from 1 July 2014 onwards, there will be a period, between 1 July 2014 and the repeal date in which there will be uncertainty about how to price goods and services (particularly for entities in the energy and waste sectors whose existing price model reflects a carbon component attributable to carbon tax compliance). There are also significant risks for those who get it wrong as there are strict Australian Competition & Consumer Commission rules to avoid organisations making windfall gains as a result of the carbon tax repeal.
If your organisation prices goods or services with a carbon component or has or had liability under the clean energy legislation, you should ensure that it has a strategy for ongoing compliance (particularly with those aspects of climate regulation that will definitely continue, such as the National Greenhouse and Energy Reporting Act (NGERS) and a strategy accounting for liabilities and profits after 1 July 2014 until date of repeal of the carbon tax.
Opportunity: Emissions Reduction Fund
In addition to navigating compliance on pricing and reporting, your organisation may be eligible to participate in the ERF, the central mechanism for emissions reductions in the Australian Government’s Direct Action Plan. The ERF will be established to purchase emissions credits generated by qualifying projects.
ERF funding will be open to any proposal that meets certain preconditions and delivers emissions reductions. If you are interested in participating, your organisation should start by identifying existing and pipeline projects in areas such as energy efficiency improvement, small projects that could be aggregated under one method or parcels of land that may support a land-based project.
Bottom line for environmental managers
- Understand your interim and ongoing compliance obligations with regard to NGERs, and competition and consumer laws and seek legal advice if you are unsure of your obligations at any point in time;
- Develop and implement a strategy for pricing goods and services and communicating price changes to customers;
- Implement financial systems to enable compliance on pricing and make provision for claims and refunds as necessary; and
- Explore opportunities to participate in the ERF through energy efficiency projects or land-based projects.