After months of often heated public debate and detailed consultation on the exposure draft, the Australia Government yesterday formally tabled its carbon tax legislation in Parliament.  The carbon tax package, comprising a suite of 18 bills, led by the Clean Energy Bill 2011, seeks to implement an emissions trading scheme across a majority of Australia’s carbon emissions from 1 July 2012.  The scheme would have a fixed permit price of A$23 for the first three years before converting to a floating price scheme.

The bills will be reviewed by a Parliamentary inquiry, which is due back to report on 4 October.  The vote in the lower house is expected on 12 October, following which debate will progress to the Senate.  A majority of members of the lower house and the Senate have previously indicated at least in principle support for the carbon tax.

For aficionados of the carbon tax, here are some of the differences between the exposure draft bills and the bills as introduced.

Natural gas liability

The liable entity for embodied emissions in natural gas is now the “natural gas supplier” rather than the “natural gas retailer”.  The definition of “natural gas supplier” is broad and refers to “a person who supplies natural gas”.

Large gas consumers

Large gas consuming facilities - i.e. those that exceed the threshold of 25,000 tonnes - must quote an Obligation Transfer Number (OTN) (see s55A).  Further, the natural gas supplier must accept their OTN.

Joint ventures

Voluntary designated joint ventures are now termed declared designated joint ventures (ie those that are not mandatory designated joint ventures). Also, for a declared joint venture:

  • a person operating a facility for a joint venture may be participant in the joint venture;
  • the requirement that none of the participants in the joint venture is foreign person has been removed; and
  • the statutory guarantee (previously applied to the Operator) has been removed.

Opt-in scheme for emissions relating to fuel

A new "Opt-in Scheme" has been included in the Bill which will commence from 1 July 2013 (i.e. one year after the commencement of the carbon pricing mechanism) which will allow eligible persons to opt in to the carbon pricing mechanism instead of paying the equivalent carbon price under the fuel tax and excise systems. 

Anti avoidance

The Bill clarifies the anti-avoidance provisions (s 29).

For example, regard will be made to “(i) the manner in which the scheme was entered into or carried out”, and “(iv) whether the scheme involves increasing the number of facilities without achieving any significant reductions in the total amount of covered emissions from the operation of the facilities”.

Significant holdings

The significant holdings rules have been lifted from 5% to 10%.  An additional reporting requirement has been added such that significant holders must report if there is “a change in the significant holding percentage for the controlling corporation’s group in relation to carbon units with a particular vintage year” (s 218).

Legal owner

Clarification that the registered holder of a carbon unit is the legal owner of the unit and obtains indefeasibility of title (s 103A).

Equitable interests

The Bill recognises that equitable interests in relation to a carbon unit may be registered in the Registry (but this will not override the personal property securities legislation) (s 109A).

Energy security loans

A provision has been included to provide legislative backing and special appropriation to support loans for energy security (s 303B).

Remission of unit shortfall charge

A regulatory discretion has been included to remit part of the amount of a unit shortfall charge where a liable entity has underreported their emissions and voluntarily discloses the mistake to the Regulator (subject to a number of conditions) (s 134A).

Clean Energy Investment Plans

Further detail has been added to the Clean Energy Investment Plans required under section 178.  These details refer to the type of information that must be included, such as EEO reports.

Biofuel emissions excluded

The Bill provides explicit exclusion of emissions attributable to the combustion of biomass, biofuel or biogas and clarification that activities covered by the agriculture and forestry sectors will not be caught (s 30).