On 9 December 2009, the Federal Government released revised draft regulations for the Carbon Pollution Reduction Scheme (CPRS) and the Renewable Energy Target (RET) Scheme. The Department of Climate Change will be taking submissions on the draft regulations up to close of business 11 January 2010.

The draft CPRS regulations have been updated to include additional activities that quality for emissionintensive, trade-exposed activity (EITE) assistance.

The new RET regulations provide assistance to EITE eligible companies that incur increased costs due to compliance with the RET scheme. Where an activity is identified as an EITE activity under the CPRS regulations, partial exemptions under the RET regulations are available in relation to those activities.

Revised CPRS Regulations

The revised CPRS regulations identify the following activities as highly EITE activities: production of bulk flat glass; production of methanol; production of carbon black; production of silicon; smelting zinc; manufacturing newsprint; aluminium smelting; production of magnesia; dry pulp manufacturing; cartonboard manufacturing; packaging and industrial paper manufacturing; and printing and writing paper manufacturing.

Moderately EITE activities under the CPRS regulations include: production of glass containers; production of white titanium dioxide pigment; integrated production of lead and zinc; and the production of high purity ethanol.

The rates of assistance that will be provided to EITE industries under the CPRS will be 94.5% for highly emissions-intensive activities and 66% for moderately emissions-intensive activities in 2011/2012.

The revised CPRS regulations have also incorporated a 'true-up' mechanism for the allocation of Australian Emission Units (AEU). This means that the allocation of AEU will be more closely aligned to actual production rather than an estimate of the likely production.

Amendments have also been made to the provisions in relation to large electricity users. These changes allow persons with 'operational control' of a facility, the controlling corporation or the person who holds the electricity supply contract, to apply for large user electricity certificates where the facility has consumed more than 2,000 gigawatt hours of electricity in the 2008-09 financial year. The certificates are determined by the Climate Change Regulatory Authority on a once-and-for-all basis.

If your business is emissions-intensive and trade-exposed but does not qualify as an EITE activity under the revised CPRS regulations, now is the time to send your comments to the Department of Climate Change setting out the reasons why your business should be categorised as EITE and benefit from the EITE assistance program.

RET Regulations

Under the RET regulations, eligible EITE companies will receive partial exemptions for RET liabilities in relation to the purchase of electricity used in carrying out EITE activities.

Where an entity carries out an EITE activity, partial exemption certificates (PEC) will be available for the 'RET liable' electricity used in that activity. The PEC will identify the amount of electricity from which the entity will be exempt for that year. The entity will then be able to provide a copy of the PEC to their electricity retailer, who in turn, will use the PEC to remove the RET liability for the supply of that electricity.

If your business is a large user of electricity, however does not qualify as an EITE activity, PEC will not be available to your business under the proposed RET regulations. You have until 11 January 2010 to provide reasons why your business should qualify as EITE to the Department of Climate Change.

How can DLA Phillips Fox assist you?

DLA Phillips Fox can help you to navigate your way through the complex issues and to develop a measured and commercially astute response. We can:

  • Prepare submissions on your behalf if you would like to comment on the CPRS or RET regulations.
  • Assist with identifying whether your business is eligible for the EITE assistance program.
  • Assist with the application process for EITE assistance.
  • Determine whether PEC are available for your business operations.

© DLA Phillips Fox

DLA Phillips Fox is one of the largest legal firms in Australasia and a member of DLA Piper Group, an alliance of independent legal practices. It is a separate and distinct legal entity. For more information visit www.dlaphillipsfox.com

This publication is intended as a first point of reference and should not be relied on as a substitute for professional advice. Specialist legal advice should always be sought in relation to any particular circumstances.