Over $10B compensation available to business

10 Jul 2011Archived News Climate Change Matters

Jobs and Competitiveness Program – Emissions-Intensive Trade-Exposed (EITE) assistance

The Jobs and Competitiveness assistance program was developed to provide free allocation of emissions permits (under an Emissions Trading Scheme model) to businesses carrying out activities that have been formally assessed as being EITE.

Targeted businesses are mainly in manufacturing and heavy industry where the concern is for 'carbon leakage': the risk that production and therefore jobs would relocate overseas. On the other hand, the Government maintains that there is a strong signal for these businesses to make investments to reduce the carbon intensity of their operations.

The Government has estimated that 40 to 50 emissions-generating activities will be deemed eligible for assistance. The examples cited are aluminium production, steel manufacturing, pulp and paper manufacturing, glass making, cement production and petroleum refining.

There are a number of thresholds that apply, depending on the carbon intensity of the activity. The initial rates of assistance will be:

  • 94.5% for highly emissions-intensive industries – defined as 2000t CO2-e/$m revenue or 6000t CO2-e/$m value-added.
  • 66% for moderately emissions-intensive industries – defined as 1000t to 1999t CO2-e/$m revenue or 3000t to 5999t CO2-e/$m value-added.

This translates to an effective carbon price of either $1.27 or $7.82 per tCO2-e at a $23 carbon price and 94.5% and 66% assistance levels, respectively.

Under the Jobs and Competitiveness program, EITE assistance decreases each year by 1.3% as an incentive to improve energy efficiency and/or emissions control within the heavy industrial sectors. Accordingly, by FY2021, the EITE assistance level drops from 94.5% to 81% and from 66% to 54%.

This decrease in protection and the projected increase in the carbon price means that, while in the short term the carbon impact will generally be minimal, the impact will increase considerably over time for EITE, even if the carbon price were to remain static. Importantly, this decreasing assistance represents a challenge to those industries, such as cement, whose emissions exposure is not related to their energy use but rather their process. The program is intended to reward businesses if they improve emissions beyond their industry average, as permits are allocated on the basis of historic emissions intensity levels.

The announcement left open the opportunity for businesses not yet assessed for compensation, to make new applications. Some activities may become eligible following the completion of formal assessments.

Please contact your Energetics Account Manager or one of the Principal Consultants listed below to discuss what opportunities may exist for your business.

Support for manufacturing jobs

Manufacturing will be further supported through the $1.2B Clean Technology Program which has three components:

  • Clean Technology Investment Program
  • Clean Technology Food and Foundries Investment Program
  • Clean Technology Innovation Program

Overall financial assistance in the form of grants is skewed towards small business, R&D and local community support. Grant support, except for R&D and innovation, operates on a basis of co-contribution of $3 from industry to $1 from government.

Clean Technology Program

The $1.2B Clean Technology Program has 3 components:

Clean Technology Investment Program

  • $800M over 7 years.
  • The grants will enable firms to invest in energy efficiency capital equipment and low-pollution technologies, processes and products.
  • Businesses with facilities that use more than 330 megawatt hours of electricity or 5 terajoules of natural gas a year, or are covered by the carbon price mechanism are eligible.
  • Funding is provided on a co-investment basis with industry contributing $3 for every $1 from government.
  • Indications are that a suite of energy efficiency measures will be developed in response to the PM's Task Group on Energy Efficiency Report. These include:
      • Undertaking further policy work on the National Energy Savings Initiative (NESI) or White Certificate scheme
      • Expanding Energy Efficiency Opportunities (EEO) program.
      • Improving governance arrangements for energy efficiency, to be nationally consistent.
      • Implementing mandatory CO2 standards for light vehicles.

Clean Technology – Food and Foundries Investment Program

This program provides special assistance for the food processing, metal forging and foundry industries. The Government will provide grants worth up to $150M over 6 years to the food processing industry and up to $50M over 6 years to the metal forging and foundry industries.

Funding is to be provided on a co-investment basis, with industry contributing on average $3 for every $1 provided by the government.

In addition to this there is a Rural Measure. The Government has decided to exclude agriculture and land sectors from the carbon price.

Clean Technology Innovation Program

$200M has been made available for R&D grants in renewable energy, low pollution technology and energy efficiency. Funding is made available on a co-contribution basis with business required to match government funding dollar-for-dollar.

Clean Energy Skills program

This program will provide the foundation for new types of workplace skills that will become increasingly more valuable as we move towards a clean energy economy.

Funding of approximately $32M will be available to help educational institutions and industry develop materials and expertise needed to promote clean energy skills. This program is aimed at tradespersons and professionals to help them develop the skills needed to deliver energy efficiency services, clean energy projects and low pollution products to households, communities and businesses.

Support for small businesses

There is a whole segment on support for small businesses, such as energy efficiency information grants ($40M providing grants to industry associations and NGOs that work with small businesses and community organisations), increasing the small business instant asset write-off to $6500 and focus on clean technologies for supply chains. 

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