House of Representatives

Explanatory Memorandum

(Circulated by authority of the Minister for Climate Change and Energy Efficiency, the Hon Greg Combet AM MP)

Chapter 3 - Amendments relating to reporting transfer certificates

Outline of chapter

3.1 Schedule 2 to the consequential amendments bill incorporates amendments to the National Greenhouse and Energy Reporting Act 2007 (NGER Act) to allow reporting transfer certificates (RTCs) to be created after 30 June 2011 and to ensure existing RTCs continue to have effect beyond 30 June 2011.

Context of amendments

3.2 The NGER Act provides a national framework for the reporting and dissemination of information related to greenhouse gas emissions, energy consumption and energy production.

3.3 RTCs allow the voluntary transfer of reporting obligations relating to a facility from a registered controlling corporation to another corporation where the other corporation has financial control of the facility and formally applies for the transfer of responsibilities.

3.4 The RTC provisions of the NGER Act are voluntary and impose no additional burden on industry stakeholders beyond those originally intended by the NGER Act. They are intended to reduce administration and economic costs for industry and increase flexibility in establishing reporting arrangements under the NGER system.

3.5 RTCs were introduced in 2009 as a temporary measure ahead of the then scheduled introduction of the Carbon Pollution Reduction Scheme (CPRS). RTC provisions were closely aligned with the liability transfer certificate (Category B) provisions of the draft CPRS legislation.

3.6 At the time the RTC provisions were included in the NGER Act, it was intended that corporations with operational or financial control of a facility would have to arrange and apply for a new liability transfer certificate from the proposed Australian Climate Change Regulatory Authority following commencement of the CPRS. As it was anticipated that the CPRS would commence on 1 July 2011, provisions in the NGER Act relating to the establishment and duration of RTCs provided that they could not be created after 30 June 2011 and were restricted to the 2008-09, 2009-10 and 2010-11 financial years.

3.7 Schedule 2 of the consequential amendments bill makes amendments to the NGER Act so that RTCs can continue to be created by the Greenhouse and Energy Data Officer beyond 30 June 2011.

3.8 The consequential amendments bill also ensures that any RTCs which have already been created will continue to have effect beyond 30 June 2011.

3.9 Extension of these provisions will continue flexibility to accommodate contractual arrangements, such as those around mining operations.

3.10 Continuation of the RTC provisions in the NGER Act through the consequential amendments bill is not intended to presuppose the introduction of a particular type of carbon price mechanism in the future. The amendments are intended to maintain the current flexible reporting arrangements until there is clear direction on carbon pricing.

Summary of new law

3.11 This chapter addresses amendments to the NGER Act to allow RTCs to be created, and for existing RTCs to continue, after 30 June 2011. These amendments are needed as a consequence of the failure of the Carbon Pollution Reduction Scheme legislation to achieve passage through Parliament.

Comparison of key features of new law and current law

Detailed explanation of new law

Definitions

3.12 The definition of 'interim financial year' in section 7 of the NGER Act, which restricts the operation RTCs to the 2008-09, 2009-10 and 2010-11 financial years, is no longer required and so is repealed [ Schedule 2, Item 1 ].

Registration

3.13 Under section 13(3) of the NGER Act, a facility which has an RTC in place will be disregarded for the purpose of determining whether the group thresholds in section 13 of the NGER Act have been met.

3.14 The amendment to remove the reference in this section to 'interim financial year' will ensure that RTCs will continue to have effect beyond 30 June 2011 [ Schedule 2, Item 2 ].

Obligations of registered corporations etc

3.15 The NGER Act takes a similar approach for reporting purposes. Under subsection 19(5A) of the NGER Act, a member of a corporation's group does not have operational control of a facility for a given day during an interim financial year if another person holds an RTC for that facility on that day. The amendment to remove the reference in this section to 'interim financial year' will ensure that RTCs will continue to have effect beyond 30 June 2011 [ Schedule 2, Item 3 ].

Reporting obligations of holders of reporting transfer certificates

3.16 RTC holders are also 'registered corporations', but they are not necessarily a controlling corporation and are provided with an RTC on the basis that they have financial control. A corporation holding an RTC for all or part of a financial year must report to the GEDO the greenhouse gas emissions, energy production and energy consumption from the operation of that facility during that time in accordance with 22G. Failure to do so may be an offence under Division 137 of the Criminal Code and a non-compliant corporation may be liable for a civil penalty of 2000 penalty units.

3.17 Amendments which, in essence, substitute references to 'financial year' for 'interim financial year', will ensure that RTCs will continue to have effect beyond 30 June 2011 [ Schedule 2, Items 4 to 9 ].

3.18 Currently under section 22M of the NGER Act, a RTC comes into force on the day specified in the certificate as the start day, and remains in force until the end of 30 June 2011.

3.19 Amendments to subsection 22M(3) of the NGER Act provide that instead of ceasing on 30 June 2011, a certificate will remain in force until it is surrendered under section 22N or is cancelled under section 22P [ Schedule 2, Item 10 ].

Publishing information

3.20 Subsections 24(1AD) and 24(1AE) of the NGER Act address the matters which the Regulator is required to or may publish in relation to reports by holders of RTCs. Amendments to subsection 24(1AD) ensure that these requirements continue to apply in relation to information about the holders of RTCs after 30 June 2011 [ Schedule 2, Items 11 and 12 ].