Tax Laws Amendment (2008 Measures No.2) Act 2008 (Cth) commences
The Tax Laws Amendment (2008 Measures No.2) Act 2008 (Cth) (TLA Act) amends the Income Tax Assessment Act 1997 (Cth) (ITAA Act) by inserting a new subdivision, 40-J, which provides for the tax deductibility of the cost of establishing carbon sink forests.
These amendments were first introduced into parliament under the Howard government in September 2007. However, they automatically lapsed when the House of Representatives was dissolved on 17 October 2007 in anticipation of the federal election. A Bill in generally similar terms was introduced by the Rudd government in February 2008 and was enacted on 24 June 2008.
The TLA Act provides for the tax deduction of capital expenditure incurred in respect of the establishment of carbon sink forests. In order to qualify for the tax deduction, the following criteria must be met:
- the trees are established in an income year
- the expense is incurred in establishing the trees in the income year, or an earlier income year
- the taxpayer carries on a business1
- the primary and principal purpose of establishing the forest is for carbon sequestration
- the purposes for establishing the trees do not include felling the trees or using them for commercial horticulture
- the expenditure is not incurred under a managed investment scheme or a forestry managed investment scheme
- the taxpayer satisfies at least one of the following three requirements:
- they own the trees and any owner of an interest the land does not use the land for the primary and principal purpose of carbon sequestration
- they lease or have a quasi-ownership right to the land which allows them to use the land for carbon sequestration and the holder of a lesser interest in the land does not use it for carbon sequestration purposes, or
- they are the licensee of the land occupied by the trees and the licence allows you to use the land for carbon sequestration purposes.the taxpayer must lodge a form outlining compliance with the above no later than five months after they submit their income tax return or five months after the end of the income year
- at the end of the income year, the trees occupy a continuous land area of 0.2 hectares or more
- at the time the trees are established, it is more likely than not that the trees will attain a crown cover of 20 percent or more and reach a height of at least two metres
- the land that the trees are planted on must have been cleared of similar sized forests as at 1 January 1990, and
- the establishment of the trees must meet any environmental guidelines issued by the Minister for Climate Change.
The legislation is structured in two phases. Phase 1 runs from 1 July 2007 to 30 June 2012, and Phase 2 runs from 1 July 2012 into perpetuity. The first phase allows deductibility in the year of expense for any eligible establishment costs. The second phase applies a low rate of deductibility of seven per cent per annum over 14 years and 105 days.
Under section 40-1010(6) TLA Act, the Climate Change Secretary must give the Tax Commissioner a notice if satisfied that any one of the requirements outlined in the points above are not met. If a notice is sent, the expenditure cannot be claimed as a tax deduction.
Under section 40-1010(6) TLA Act, the Minister for Climate Change must make guidelines about environmental and natural resource management in relation to the establishment of trees for the purposes of carbon sequestration. On 2 July 2008, the Minister for Climate Change introduced such guidelines (guidelines). The one-page guidelines provide that the carbon sink forests should be:
- based on regionally applicable best practice approaches for achieving multiple land and water environmental benefits
- guided by natural resource management plans and water sharing plans, and
- recognise and adhere to all government regulatory requirements.
National Greenhouse and Energy Reporting Amendment Bill 2008 passed
In our August Environment Quarterly Energy and Climate Change Update2, we reported on the National Greenhouse and Energy Reporting Amendment Bill 2008 and the key amendments to be introduced by that Bill. The amendments received Royal Assent on 15 September 2008.
Saab ‘green’ claims declared misleading by Federal Court: Australian Competition and Consumer Commission v GM Holden Ltd [2008] FCA 1428
In the August edition of Environment Quarterly, we highlighted the Australian Competition and Consumer Commission’s (ACCC) increased focus on environmental claims. This focus was further highlighted in Federal Court proceedings brought by the ACCC against GM Holden Limited.
On 18 September 2008, the Federal Court declared that GM Holden Limited made false and misleading claims in an advertising campaign for its Saab range of motor vehicles.
The newspaper and magazine advertisements contained representations that the carbon dioxide emissions from the Saab range would be neutral over the life of the vehicle and that in the first year following the purchase, 17 native trees would be planted on behalf of the purchaser to offset the carbon dioxide emissions for the life of the vehicle.
The ACCC had communicated its concern about the veracity of these claims to GM Holden Limited. GM Holden disputed that the advertisements were misleading and in any event explained that the advertisements had already been withdrawn from publication. However, according to the judgment, the ACCC decided that ‘the conduct called for a more emphatic response’.
By consent, the Federal Court declared that GM Holden Limited hade breached the Trade Practices Act 1974 (Cth) by engaging in misleading conduct. Contrary to the representations in the advertisements, the carbon dioxide emissions from the vehicles would not be neutral over the life of the vehicle and the trees planted would not provide sufficient offsets for more than a single year’s operation of the vehicle. The ACCC accepted court enforceable undertakings from GM Holden Limited, including requiring it to restrain marketing staff in relation to misleading and deceptive conduct in the context of ‘green’ marketing claims. GM Holden Limited was also ordered to pay the ACCC’s costs.
Emissions trading confirmed for 2010 start
On 30 October 2008, the Commonwealth Treasury released its report setting out the results of its economic modelling of the impact of emissions trading in Australia, ‘Australia’s Low Pollution Future: The Economics of Climate Change’. Shortly afterwards, the Prime Minister, Kevin Rudd, confirmed that the Carbon Pollution Reduction Scheme, the government’s proposed emissions trading scheme, would commence in 2010 as previously announced.
Freehills reported on these matters on 31 October 2008.3
Previously, on 3 October 2008, the Treasury had released its Climate Change Mitigation Policy Modelling assumptions publication. The publication summarises the key assumptions used for the modelling of climate change mitigation policy. The publication relies on a range of models (including sector-specific models) in its assumptions including the ABARE Global Trade and Environment model and the Monash Multi-Regional Forecasting model.
The assumptions include global population, productivity, gross domestic product (GDP), Australia's terms of trade, energy price assumptions, land-use and forestry, and technology assumptions. Interestingly there are many assumptions also made about carbon capture and storage (CCS) technology. For example, coal CCS technology is assumed to be deployed at a carbon price of $45 per tonne of CO2e and gas CCS technology at $100 per tonne of CO2e.
Garnaut Final Report released
The Garnaut Climate Change Review released its Final Report (report) on 30 September 2008. On 1 October 20084, Freehills reported on the report’s recommendations which are based on detailed modelling.
Submissions on Carbon Pollution Reduction Scheme Green Paper now closed
Submissions for the Federal Government’s Carbon Pollution Reduction Scheme closed on 10 September 2008. Submissions are available on the Department of Climate Change web site. The Carbon Pollution Reduction Scheme White Paper5 was released on 15 December, and draft legislation is expected in early 2009.
Carbon capture and storage technology initiatives announced
On 19 September 2008, the Prime Minister announced a $100 million Global Institute to accelerate the development of carbon capture and storage technology.
At the recent Council of Australian Governments’ (COAG) meeting, it was agreed that the Commonwealth would work with the states and territories to finalise the design of the Global Carbon Capture Storage (CCS) Institute. COAG also agreed that jurisdictions would hasten the introduction of consistent regulation of carbon capture storage.
This supplements the following Federal Government initiatives which were announced in July:
- establishment of a National Low Emissions Coal Initiative—a program to accelerate the development of technologies that will reduce greenhouse gas emissions deriving from coal use, and provides funding for research, and
- establishment of a National Low Emissions Coal Council (council) and Carbon Storage Taskforce (taskforce)—the council is to provide guidance and advice on the development and implementation of the National Low Emissions Coal Initiative. The taskforce will make recommendations to the council on a program for geological mapping, infrastructure and storage locations.
It also supplements the legislative framework to be established by the Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 (OPAGGS Bill) which is currently awaiting assent. We reported on the OPAGGS Bill in the August Environment Quarterly Energy and Climate Change Update6. However, since that update the Senate made the following amendments to the OPAGGS Bill:
- some control over the discretion of the responsible Commonwealth Minister in making an assessment of a ‘significant risk of a significant adverse impact’ in various circumstances has been provided for
- the ability of holders of petroleum production licences to inject a greenhouse gas substance obtained as a by-product of petroleum recovery operations has been clarified, and
- the Commonwealth will now assume long-term liability for greenhouse gas injection sites from approximately 15 years after the issue of a site closing certificate for the site.
Australia and Clinton Climate Initiative sign Memorandum of Understanding
On 26 September 2008, the Prime Minister signed a Memorandum of Understanding (MOU) with the Clinton Climate Initiative of the William J. Clinton Foundation (Foundation).
According to the Prime Minister’s press release, the MOU will see Australia and the Foundation collaborate to:
- deploy carbon capture and storage technology to large scale projects
- examine policies to encourage large scale solar power generation in Australia, and
- design collaborative policies in conjunction with large cities and other organisations on improving energy efficiency.
Mr Rudd explained that the Foundation will work with Australia through the Global Carbon Capture and Storage Initiative discussed above.
COAG agrees to develop National Strategy for Energy Efficiency
Emerging from the Council of Australian Governments’ (COAG) meeting on 2 October 2008 was agreement to develop a National Strategy for Energy Efficiency. The COAG Communiqué indicates that the strategy aims ‘to accelerate energy efficiency efforts across all governments and to help households and businesses prepare for the introduction of the Federal Government’s Carbon Pollution Reduction Scheme.’
The first step will be to introduce national legislation (subject to a regulation impact statement) for appliance energy performance standard and labelling.
Responsibility for policies and programs are to be agreed by the end of 2008 with implementation of the strategy to be finalised by June 2009.
Green Building Council Australia launches industrial facility rating tool
On 3 October 2008, the Green Building Council of Australia launched its Green Star – Industrial Pilot rating tool. The tool can be used to assess the environmental features of new and refurbished industrial facilities against eight specified categories: energy, water, emissions, materials, indoor environment quality, ecology, management and transport and innovation.
There are existing tools for commercial offices, shopping centres, healthcare and education facilities.
First independent carbon offset provider ranking launched
Carbon Offset Watch, the first independent ranking of Australian carbon offset providers, was launched on 16 September 2008 by Total Environment Centre, CHOICE and the Institute of Sustainable Futures. The system ranks 20 of the largest carbon offset providers from ‘Outstanding’ to ‘Adequate’ and aims to help consumers make informed decisions when purchasing offsets.
No new policy developments this quarter.
Victoria moves to encourage greenhouse gas sequestration: Greenhouse Gas Geological Sequestration Act 2008 (Vic)
The Greenhouse Gas Geological Sequestration Act 2008 (Vic) (GGG Act) received Royal Assent on 5 November 2008 and will commence on 1 January 2010 if not proclaimed earlier. The GGG Act establishes the legal framework that will regulate all onshore greenhouse gas sequestration activity in Victoria, including:
- the exploration of geological storage formations
- the retention of potentially viable geological storage formations, and
- the injection, storage and monitoring of greenhouse gasses.
This is achieved through a system of titles, similar to those operating under the Petroleum Act 1998 (Vic), and is outlined in more detail below.
Exploration permits
The exclusive right to explore for greenhouse gas sequestration formations is conferred by an exploration permit. It is an offence to undertake any exploration activity without an exploration permit.
Exploration permits are to be auctioned through a competitive tender process. Under this system, the minister will invite applicants to tender for an exploration permit over a specified area of land. The tender must outline (among other things):
- the work program proposed by the applicant
- details of the applicant’s relevant technical experience and the technical advice available to the applicant
- details of the financial resources available to the applicant, and
- a community consultation plan.
The minister will then have a discretion as to who to grant the permit to, and will be able to refuse to grant the permit if no applicants produce an acceptable plan. If granted, the exploration permit must be entered into a publicly available register.
Once an exploration permit is granted, the exploration permitee will be permitted to establish the extent of any underground geological storage formation in their permit area, and assess the feasibility of injecting greenhouse gases into that formation. The permitee must immediately report any suitable geological storage formations to the minister.
An exploration permit will be valid for five years, and may be extended by a further five years on application by the exploration permitee.
Retention leases
The holder of an exploration permit will be able to apply to the minister for the grant of a retention lease over any part of the permit area. The retention lease will enable the exploration permitee to retain the exclusive right to an underground geological storage formation.
It is proposed that the minister will have a discretion to grant a retention lease if the applicant can establish that it has found a geological storage formation that is likely to be commercially viable in the next 15 years. The minister is obliged to grant a retention lease if satisfied that the applicant has found a geological storage formation that is likely to be geologically suitable for injection, and the applicant does not have access to a commercially viable volume of greenhouse gas at the time the application was made.
A retention lease must be entered onto a publicly available register, and will remain valid for five years. This may be renewed twice, meaning that a retention lease can exist for a maximum of fifteen years.
During the term of the lease, a retention lessee will be able to continue exploration activities.
The retention lease may be cancelled if the minister forms the opinion that storage in that geological formation has become commercially viable, and the lessee has not applied for an injection and monitoring licence.
Injection and monitoring licences
An exploration permitee or retention lessee will be able to apply to the minister for the grant of an injection and monitoring licence. An injection and monitoring licence authorises the holder of the licence to inject greenhouse gas into the geological formation. It is an offence to inject greenhouse gasses without an injection and monitoring licence.
If there is no exploration permitee or retention lessee for a suitable geological storage formation (because for example, the exploration permit has been cancelled or has expired), the minister will be able to auction the grant of an injection and monitoring licence over that formation. The tender must be accompanied by details of the applicant’s technical capacity and financial resources, as well as a 10 per cent deposit on the amount that the applicant is willing to pay for the licence.
The minister can only grant the injection and monitoring licence if satisfied that:
- the geological formation is suitable for long-term sequestration, and
- the applicant has access to a commercially viable quantity of greenhouse gas.
If granted, the injection and monitoring licence must be entered onto a publicly available register.
It will not be possible to commence injection until an injection and monitoring licencee obtains approval for their injection and monitoring plan. The injection and monitoring plan will be required to include a description of proposed activities, details of baseline conditions, an assessment of any effects of leakage on the environment, public health or other resources, and a community consultation plan.
The minister will only be able to approve an injection and monitoring plan if satisfied that:
- the geological formation is suitable for injection and storage of the greenhouse gas
- the proposed operations will not present a risk to public health or the environment, and
- the impact on other resource uses is acceptable.
For the purpose of assessing whether the proposed operations will present a significant risk to the environment, the Minister must refer the plan to the Ministers responsible for administering the Environment Protection Act 1970 (Vic) and the Water Act 1989 (Vic), and to the Environment Protection Authority. All can make binding recommendations as to whether a plan should be approved.
For the purpose of assessing the impact on other resources, the minister may approve the injection operations if the applicant has consent from the owner of the other resource, or otherwise if it is in the public interest to do so.
Proponents are not required to obtain certain approvals under the Environment Protection Act 1970 (Vic) and the Water Act 1989 (Vic) if they have an approved injection and monitoring plan under the GGG Act.
Obligations on the injection and monitoring licencee will include ensuring that works are carried out in accordance with the works plan, reporting any serious or potentially serious situations to the minister, and paying a royalty fee based on the volume of greenhouse gas injected. The licencee must also monitor the greenhouse gas reservoir until they can satisfy the minister that:
- the stored greenhouse gas is behaving in a predictable manner, and
- the risks associated with permanent storage have been reduced to as low as reasonably practicable.
On surrender of an injection or monitoring licence, the Crown will become the owner of any greenhouse gases injected into the geological formation. A long-term monitoring and verification plan must be prepared for the minister’s approval, and the licencee must pay the agreed estimated costs of that monitoring, which will then be carried out by the Crown. Common law liabilities (such as for negligence or nuisance) continue to apply to the licencee.
An injection and monitoring licence continues in force until it is surrendered by the licencee or cancelled by the minister. Grounds for cancelling a licence include non-compliance with a work plan, breach of licence condition, or non-use for a continuous two year period.
Special access authorisations
A special access authorisation will allow an exploration permittee, retention lessee or an injection and monitoring licencee to undertake various activities outside of their authorised area. Activities that can be undertaken pursuant to a special access authority include carrying out seismic surveys or baseline investigations, taking geological samples, creating wells, and monitoring behaviour of injected liquids and gases.
The applicant for a special access authority must submit a proposed work and consultation plan to the minister. There are additional requirements if the applicant proposes to construct and operate a well.
In assessing whether or not to grant a special access authority, the minister will be required to consider the extent of any discoveries already made by the applicant, the technical qualifications and financial resources available to them, the work program of any other permittee or licencee with an interest in the area, whether the other permitee or licencee has consented, and whether the likely information will be of significant value to Victoria. If granted, the special access authorisation must be entered onto a publicly available register.
The grant of a special access authority does not confer any exclusive rights on the holder, and is valid for a period that will be prescribed in future regulations.
Commercial implications
The approach to regulating carbon capture and storage (CCS) complements other Victorian Government activities which have been directed at developing the CCS industry (such as $127 million being allocated to La Trobe Valley CCS projects in the State Budget), and also complements the Commonwealth’s Offshore Petroleum Amendment (Greenhouse Gas Storage) Bill 2008 which was recently approved by the Senate (10 November 2008).
While the GGG Act offers insight into how CCS projects will be regulated in Victoria, the significant discretion vested in the minister to control the operation of CCS projects may be seen by some as a significant (and prohibitory) regulatory risk. The economic and regulatory incentive for investing in CCS projects remains elusive, though the carbon price signal arising from the introduction of the Carbon Pollution Reduction Scheme may change this dynamic.
Draft regulations for VEET Scheme
The Department of Primary Industries has released a draft version of the Victorian Energy Efficiency Target Regulations (draft VEET regulations), the body of rules that will underpin the Victorian Energy Efficiency Target Scheme (VEET scheme). The VEET Scheme is due to commence on 1 January 2009.
Under the VEET Scheme, energy retailers are required to achieve annual emissions reduction targets by introducing energy saving measures into Victorian homes. Energy retailers prove compliance by obtaining and surrendering certificates. A certificate is created when one tonne of carbon dioxide is reduced from households.
The draft VEET regulations outline the following:
- the energy efficiency activities that may be implemented by liable parties to create energy efficiency certificates
- how to determine the number of certificates which may be created by an energy efficiency activity, and
- the penalty rate for non-compliance with the requirements of the scheme.
Part 2 of the draft VEET regulations contains a list of activities that are eligible to create energy efficiency certificates, including:
- decommissioning a gas or liquefied petroleum gas heater and installing products that are more energy efficient
- installing a solar pre-heaters on water heaters
- installing ceiling or floor insulation
- installing glazed windows on external walls
- installing products that reduce air leakage from houses (such as sealant to reduce ventilation leakage through door frames and windows), and
- removing certain refrigerators or freezers and replacing them with certain high efficiency refrigerators or freezers.
The method and variables that must be used to calculate greenhouse gas reductions are outlined in the schedules to the draft VEET regulations. The opportunity to comment on the draft VEET regulations closed on 3 October 2008, and the content of the final regulations is currently being finalised by the Department of Primary Industries.
Energy Legislation Amendment (Retail Competition and Other Matters) Bill 2008
The Energy Legislation Amendment (Retail Competition and Other Matters) Act 2008 (ELA Act) received Royal Assent on 22 October 2008. The ELA Act is primarily concerned with facilitating competition among the retail energy suppliers.
The ELA Act also provides retail energy suppliers with an option to either:
- provide prescriptive information to consumers on their greenhouse gas emissions (as they are currently required), or
- provide information that enables consumers to assess whether the electricity consumption of their household is above, equal to or below the average consumption of a similar household.
The purpose of the amendment is to assist residential electricity consumers to better manage their energy use.
Climate change advisory group established to advise Victorian Government
A Climate Change Reference Group (CC Group) has been established to provide independent advice to the Victorian Government on a range of climate change issues. The CC Group will advise the Victorian Government on climate change policy in the areas of:
- the Carbon Pollution Reduction Scheme
- future technology and industry opportunities for Victoria created in a low-carbon economy, and
- the type of support and assistance required to transition to a low-carbon economy.
Queensland Government Environmental Offsets Policy released
The Queensland Government Environmental Offsets Policy (policy) has been released and comes into effect on 1 July 2009. The policy, developed by the Environmental Protection Agency, guides the use of environmental offsets throughout Queensland.
An environmental offset is an action taken to counterbalance unavoidable, negative environmental impacts that result from development activity. Currently Queensland has three specific-issue offsets policies (SIOP) that provide detailed direction for offsets that address specific environmental issues. The three SIOPs are:
- Vegetation Management – Policy for Vegetation Management Offsets (September 2007)
- Marine Fish Habitat – Mitigation and Compensation for Works or Activities Causing Marine Fish Habitat Loss (2002), and
- Koala Habitat – Offsets for Net Benefit to Koalas and Koala Habitat (2006).
Each SIOP is developed and managed by separate government agencies and is consistent with a particular piece of legislation that governs environmental management.
The policy provides an overarching and integrated framework for the use of SIOPs and ensures that environmental offsets are used consistently across the entire state. It does this through the establishment of a number of principles and guidelines which are based on ecologically sustainable development and govern the preparation, operation, monitoring and review of all existing SIOPs and the development of any new SIOP. These principles and guidelines ensure that development can occur without degradation of the environment and that offsets will only be used as the last line of environmental preservation.
Review of Queensland Government climate change strategy
The Minister for Sustainability, Climate Change and Innovation has released a document titled Issue Paper – Review of the Queensland Government Climate Change Strategy (Issue Paper) for public consultation.
The Issue Paper forms part of the state government’s broader review of its climate change strategies under:
- ClimateSmart 2050 – Queensland climate change strategy 2007: a low carbon future (June 2007), and
- ClimateSmart Adaptation 2007–12: An action plan for managing the impacts of climate change (June 2007).
The review seeks to update and consolidate the current strategies in light of the latest scientific assessments as well as national and international developments in climate change and climate change policy. The Issue Paper is a key step in the review process and seeks to identify relevant issues in each of Queensland’s major sectors, including:
- energy
- industry
- community
- planning and building
- primary industries
- transport
- government leadership, and
- ecosystems.
The feedback and information received through public consultation will be taken into account in the preparation of the revised ClimateSmart strategy, due for release in late 2008.
Queensland Government releases vision for the future
The Queensland Premier has released the ‘Toward Q2: Tomorrow’s Queensland blueprint’ which outlines 10 targets the government hopes to achieve by 2020. The 10 targets are based within the five categories of ‘strong’, ‘green’, ‘smart’, ‘healthy’ and ‘fair’ and will guide state government policy over the next year.
Within the green category, the government hopes to:
- cut Queensland’s greenhouse gas emissions by one third through reduced car and electricity use by 2020, and
- protect 50 per cent more land for nature conservation and public recreation by 2020.
The government will publish annual progress reports on the targets.
Office of Clean Energy to be established
The Queensland Premier has announced plans to establish a new Office of Clean Energy (OCE) to drive the development of the Queensland’s renewable energy industry and explore other methods for reducing the state’s carbon footprint.
The OCE will be located within the Department of Mines and Energy and will focus on:
- mapping, identifying and sourcing potential renewable energy locations in the state
- removing regulatory barriers to the development of the renewable energy industry
- developing a Queensland Government funding program to encourage private sector investment and start-up in the industry
- working with the Federal Government on the design of the mandatory renewable energy target scheme7, and
- working with electricity providers to stimulate greater demand from renewable energy sources.
The OCE will report directly to the Minister for Mines and Energy and provide regular progress reports to Cabinet.
Map of renewable energy sources
A map showing the locations of sources of sustainable energy in Western Australia was released in August 2008 by the Australian Conservation Foundation, the Conservation Council of Western Australia and the Western Australian Sustainable Energy Association.
The map includes geothermal, wind and wave energy sources in the state and can be found online.8
New study looks to climate change
A new four year study into the possible implications of climate change in Western Australia will be undertaken as part of the Indian Ocean Climate Initiative, involving Australia's Commonwealth Scientific and Industrial Research Organisation and the state government. The $8 million study will look at whether temperature rises and reductions in rainfall are caused by human activities or natural climate cycles and how these are likely to be affected by changes in the concentration of greenhouse gas.
Regulations to underpin the Residential Energy Efficiency Scheme released
The Electricity (General) Variations Regulations 2008 (SA) (EG regulations) were made under the Electricity Act 1996 (SA) and insert a new Part 2AA into the Electricity (General) Regulations 1997 (SA) (commencing on 21 August 2008).
The EG regulations establish the body of rules that will underpin the Residential Energy Efficiency Scheme (REES), which is due to commence on 1 January 2009.
Under the REES, retail energy suppliers will be required to:
- undertake energy audits
- meet their greenhouse gas reduction target, and
- meet their priority group greenhouse gas reduction target.
Under the energy audit obligation, retail energy suppliers will be required to assist homeowners to assess current energy use practices, compare them to energy efficient practices, and identify practical ways that homes can be more energy efficient.
Under the greenhouse gas reduction target obligation, retail energy suppliers will be required to achieve specified greenhouse gas reductions through the provision of energy efficiency products and activities to South Australian households.
Under the priority group greenhouse gas reduction target obligation, retail energy suppliers will be required to achieve a set amount of the greenhouse reductions in ‘priority’ low-income households.
Each target will be set by the minister, and then apportioned to liable retail energy suppliers according to a formula contained in the EG regulations.
In order to be liable under the REES scheme, retail energy suppliers must have customer levels that exceed a threshold level that will be set by the minister.
If a retail energy supplier produces more than their required amount of abatement through successful implementation of energy efficiency measures, they can either sell that credit to another retail energy supplier, or they can use it to offset future liability under the scheme.
The EG regulations also establish the Essential Services Commission, the body who will be in charge of administering the REES.
Draft Wind Farm Noise Guidelines
The Environment Protection Authority (EPA) has released the Draft Wind Farms Environmental Noise Guidelines 2008 (draft guidelines). The draft guidelines have the following two aims:
- to provide guidance to developers and planning authorities assessing wind farm noise impacts at the permit stage, and
- to provide guidance on what is required to comply with the general environmental duty of care in section 25 of the Environment Protection Act 1993 (SA) (this section states that a person must not undertake an activity that pollutes, or might pollute, the environment unless the person takes all reasonable and practicable measures to prevent or minimise any resulting environmental harm).
The draft guidelines propose two levels for compliance—a base noise level for low wind speeds, and a level that varies according to wind speed.
The draft guidelines also set out proposed procedures for background noise measurement, noise prediction and compliance monitoring.
Comments on the draft guidelines were required by 20 November 2008.
Tasmanian framework for action on climate change released
On 17 July 2008, the Tasmanian Premier released the Tasmanian Framework for Action on Climate Change (framework).
The framework outlines a number of actions that the state will look to undertake in order to meet the state government’s aim to reduce Tasmania’s greenhouse gas emissions to at least 60 per cent below 1990 levels by 2050. These actions include:
- introducing Climate Change Impact Statements for relevant Cabinet papers so that climate change can be better integrated into government decisions. It is anticipated these climate change considerations will be integrated into Tasmanian Government processes by December 2008
- entering into a partnership agreement with the local government sector to guide collaborative action on ways to reduce the carbon emissions of local governments, and to educate the state’s population about climate change
- releasing a discussion paper canvassing the options for providing minimum renewable energy feed-in tariffs to households and small energy consumers that contribute surplus renewable energy into the electricity grid
- expanding the Climate Futures for Tasmania project to include an examination of the likely impact of climate change on the state’s infrastructure. The final report on the extension of the project is due to be completed in 2010
- integrating climate change considerations into the Regional Planning Initiatives proposed for the three regions of the state, as well as the subregional land use framework for the East Coast
- undertaking a review into public transport that includes looking at the potential for hybrid, hydrogen and CNG-powered buses
- asking the Australian Innovation Research Centre to report on ways to encourage innovation in agriculture to respond to the challenges of climate change. The report is expected to be completed by early 2009, and
- undertaking a trial program to provide free energy audits and insulation for low income households in three test areas across the state.
Although any actions taken by the Tasmanian Government will be heavily influenced by the Commonwealth’s Carbon Pollution Reduction Scheme, the Framework commits the state government to setting interim and sector-based emissions reduction targets by the end of 2009.
No new policy developments this quarter.
Laws passed to reduce stamp duty from green vehicles
The ACT Government has passed a Disallowable Instrument under section 139 of the Taxation Administration Act 1999 (ACT) that establishes a scheme to reduce stamp duty on the purchase of green cars (scheme).
According to the scheme, stamp duty will be charged on the purchase of new light vehicles according to the vehicle’s environmental performance. All vehicles will have a Green Vehicle Rating of A, B, C or D on which duty rates will be based.
The environmental performance ratings are based on a combination of two ratings from the Commonwealth’s Green Vehicle Guide:
- a greenhouse rating (which is a measure of a vehicle's carbon dioxide emissions), and
- an air pollution rating (which is a measure of noxious pollutants).
Vehicles that achieve the highest environmental rating will attract a 100 per cent discount.
The ACT is the first jurisdiction in Australia to introduce the differential stamp duty. The scheme commenced on 3 September 2008.
Pre-feasibility study for solar power plant released
A pre-feasibility study for a large-scale solar power plant in the ACT was completed on 2 September 2008 (study). The purpose of the study was to:
- investigate solar power generation technologies
- identify an appropriate solar technology for the ACT, and
- establish the economic viability of a solar power facility for the ACT.
The study concluded that a 22 MW facility, utilising solar thermal trough technology was the most favourable technology for ACT conditions. This development would be large enough to produce electricity for 10,000 homes. The total project cost is estimated at $141 million (including land and infrastructure) and could be commissioned by 2012. Operational and maintenance costs are estimated at $2 million per annum approx.
The study also considered an alternative PV cell-based plant, however the total project cost for a PV cell-based plant was substantially higher, at $424 million.
The ACT Government is intending to test the market for tenders to design and construct the plant shortly.
Endnotes
1. This requirement is sufficiently broad to allow those businesses who wish to abate their own greenhouse gas emissions via a carbon sink forest to be eligible for the deduction.
2. Environment Quarterly Energy and Climate Change Update, August 2008
3. ‘Emissions trading confirmed to start in 2010’
4. ‘Garnaut Climate Change Review releases final report’
5. 'Emissions trading in Australia'
6. Environment Quarterly Energy and Climate Change Update, August 2008
7. 'The expanded Renewable Energy Target'
8. ‘Western Australia’s clean energy future: Great renewable energy resources’
More information
For information regarding possible implications for your business, contact a member of the Environment & Planning team.