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Industry Briefing Buy-Back and Transfer of Units Clean Energy Regulator August 2012

Industry Briefing Buy-Back and Transfer of Units Clean Energy Regulator August 2012. Focus of today’s briefing. An overview of the Carbon Pricing Mechanism JCP and ANREU applications A practical demonstration of: Buy-back transaction Transfer transaction This presentation will not address:

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Industry Briefing Buy-Back and Transfer of Units Clean Energy Regulator August 2012

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  1. Industry BriefingBuy-Back and Transfer of UnitsClean Energy RegulatorAugust 2012

  2. Focus of today’s briefing • An overview of the Carbon Pricing Mechanism • JCP and ANREU applications • A practical demonstration of: • Buy-back transaction • Transfer transaction • This presentation will not address: • Specific eligibility criteria for JCP applications • Discussion regarding specific circumstances (Commercial in confidence)

  3. Background – Carbon Pricing Mechanism • The Clean Energy Regulator was established on 2 April 2012 • Carbon pricing mechanism commenced 1 July 2012 • Stage 1 Fixed price period • From now to 30 June 2015 • Fixed price for each tonne of covered emissions • Stage 2 Flexible price period • Commencing 1 July 2015 to 30 June 2018 • Transition to a market based emissions trading scheme • ‘Flexible’ price will be set by the market

  4. Carbon pricing mechanism: coverage • commenced 1 July 2012 • covers around 300 largest emitters • covers 60% of emissions • covered - stationary energy, non-legacy waste, industrial processes, fugitive emissions • not covered - agriculture, transport, landfill legacy, closed landfill, decommissioned mines, synthetic gases, biomass, biofuel and biogas

  5. Carbon pricing mechanism: liable entities • Liability restricted to those entities with: • operational control of facility • emissions threshold of 25,000 tCO2-e • or supply natural gas • or use natural gas • Scope 1 emissions

  6. Purpose behind the JCP Liable entities EITEs The carbon pricing mechanism applies to Australia’s largest emitters Incur direct or indirect costs To provide ongoing assistance to companies that produce a lot of carbon emissions, but are constrained in their capacity to pass through costs in global markets.

  7. Form of JCP assistance Free carbon units are issued to eligible applicants through ANREU. Carbon units have some general features: • Vintage year of unit means a particular financial year. • They are personal property and legally owned by the registered holder. • Transferable between ANREU accounts. • Defined as a financial product. • Have cancellation or relinquishment requirements under the Act.

  8. Definition of EITE activities • The definition of eligible EITE activities and a full list of EITE activities can be found in Part 3 of Schedule 1 of the Regulations. • There are currently over 40 eligible EITE activities in the Regulations. • Part 3 of Schedule 1 of Regulations contains: • Definition of activity. • Classification of activity (highly/moderately emissions intensive). • Baselines for activity.

  9. For activities not currently included • Contact the Department of Climate Change and Energy Efficiency (DCCEE) website at www.climatechange.gov.au • See the “Jobs and Competitiveness Program” section under “A-Z of Government Initiatives”. • Only DCCEE can initiate a preliminary assessment of eligibility. • T: 1800 018 831 • E: eite@climatechange.gov.au

  10. How to apply for free carbon units under JCP • Ensure eligibility. • Use the prescribed form for the application. • Ensure the application is correct and complete. • Submit application by 31 October of the relevant financial year. • Please see video-on-demand for further information: • www.cleanenergyregulator.gov.au

  11. Eligibility to apply for free carbon units Part 5 of Schedule 1 of the Regulations details the eligibility criteria: An eligible person may be: • the legal person who had operational control of the facility; or • a legal person who was a participant in a joint venture that operated the facility; or • the holder of a liability transfer certificate in relation to the facility. Shared eligibility – more than one eligible person • Must lodge combined application

  12. Assessment of application by the Clean Energy Regulator • Timeframe for processing by Clean Energy Regulator: • Completed applications – within 60 days of receipt • The Clean Energy Regulator may seek further information to support your application • Pre-requisites must be completed: • Audit report • Statutory declaration • ANREU account

  13. Calculating the number of free carbon units • Calculation formula: • Refer to Part 9 of Schedule 1 of Regulations. • In general, the calculation of assistance involves an allocation for direct emissions, electricity use and natural gas feedstock. • Adjustments for previous year’s allocation and special arrangements may apply.

  14. Industry roles & responsibilities • Apply (separately) for: • ANREU Account • JCP and other types of free carbon units • Manage Accounts (Authorised Account Representative) • Buy-back and transfer units

  15. ANREU account creation To create an ANREU account • visit the Clean Energy Regulator website for the form • Separate forms depending on your situation • A further form is available for bank account details

  16. Account creation – key points Applications: • Identity documentation must be certified by an authorised person • Applications will not be processed until all relevant certified identity documentation has been supplied and verified • Only nominated Authorised Representatives are issued a USERID and password to logon to system

  17. Buy-back of free carbon units • Holders of free carbon units can sell them to the Clean Energy Regulator • Alternatively you may wish to transfer these units to another ANREU account or use them to meet your end of year liability • Applies to units issued under JCP • Applies to Coal-fired Generators Package (commencing in 2013)

  18. Buy-back of free carbon units • Buy-back price is discounted based on: • RBA triple B corporate bond rate, and • the number of days before 15 June • Daily buy-back price of a carbon unit to be published on the Clean Energy Regulator website • Bank details must be provided to process payment

  19. Buy-back of free carbon units - cont • A buy-back must be completed by an Authorised Account Representative; Initiator and Approver • Free carbon units are cancelled if not surrendered or bought-back by 1 February following the vintage year • Payments are processed by the Clean Energy Regulator within five business days

  20. Transfer of units • Units must be available for transfer from the source account • For transfer to occur, a receiving account must be specified • A Transfer must be completed by an Authorised Account Representative; Initiator and Approver

  21. Future Capability • Similar processes will be followed for future transactions • Purchase of carbon units • Surrender of carbon units • Shortfall management

  22. More information General • T: 1300 553 542 • W: www.cleanenergyregulator.gov.au E: enquiries@cleanenergyregulator.gov.au ANREU Shaun Calvert 02 6159 3398 E: registry-contact@cleanenergyregulator.gov.au • Jobs and Competitiveness Program Kim Collins 02 6159 3942 • E: industryassistanceschemes@cleanenergyregulator.gov.au

  23. Questions

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