Key considerations for the Clean Energy Act (and supporting legislation) repeal are:
It is intended that the 2013/2014 financial year will be the final year of the current carbon price.
The Government has made reference to back-dating the repeal to July 1 2014 should the legislation not pass through the Senate before that time.
With a commitment to also cease Jobs and Competitiveness Program (JCP) Assistance from 1 July 2014, alternative arrangements are proposed to facilitate the true-up of assistance received for the 2013/2014 compliance period with actual production rates for the period. The Government has referred to introducing ‘specific reporting and audit arrangements’ to support this process.
JCP permit buy-back arrangements will remain in place until 2 February 2015, at which time final 2013/2014 liabilities will be surrendered by all liable entities.
Fuel tax rebate reductions will cease from 1 July 2014.
The ACCC will be tasked with ensuring that no misleading claims relating to carbon pricing are made, in acknowledgement of the repeal.
Submissions relating to this repeal process are due Monday 4 November 2013. Energetics can assist your business in the development of a submission.
The Direct Action process is intended to run concurrently with the repeal of the carbon price, but may be impacted by an early repeal of the carbon price.
A clear position on Direct Action, including the establishment of emissions baselines, will be necessary to ensure effective participation in the consultation process in the short time allocated.
The government intends to repeal the carbon tax by 30 June 2014, even if that requires retrospective legislation. While business should plan according to this timetable, Energetics recommends that the possibility of delays is factored into internal risk management processes.
As the government has committed to fulfilling its obligations under the Kyoto Protocol and, as stated in its media release this week, to meeting the national minimum emissions reduction target of 5% by 2020, industry should continue to include a shadow carbon price in business decisions. This issue has long term implications for capital expenditure decisions, market positioning and competitive advantage.
What are the major risks?
The key risks that remain are:
Negotiations with new minor parties in the Senate will be critical to ensure the passage of legislation to repeal the Clean Energy Future package and to implement Direct Action. We expect however, that the Palmer United Party, allied with the Australian Motoring Enthusiasts’ Party, will support the planned passage of legislation. There may, however, still be delays.
Associated with the transitionary arrangements from the repeal of the Clean Energy Act particularly for JCP/ and Energy-Intensive Trade-Exposed companies, and those who elected to opt-in to the carbon scheme for large liquid fuel users. The critical issue for these businesses is ensuring that your liability is correctly acquitted.
You can read an overview of the major areas of focus in the Emissions Reduction Fund design consultation in our article “Designing the new Emissions Reduction Fund (ERF) in Direct Action”.
With this major change in Australia’s climate change policy response, Energetics can assist your business to understand and manage the risks, and ensure that you are well placed to respond to the new policy framework.
Please contact one of our experts to discuss the approach your business should take.