Yesterday, 10 March 2009 saw the release into Parliament of exposure drafts of the highly anticipated suite of proposed legislation by the Federal Government for its Carbon Pollution Reduction Scheme (CPRS).

Though there has been, and will no doubt continue to be, much political debate as to the timing of the commencement of the scheme, the release of the drafts finally provides details of the Government’s plan as generally outlined in Professor Garnaut’s report, and the subsequent green and white papers that followed it.

Whilst the legislation (6 draft bills, approximately 500 pages including reams of explanatory material) were released into Parliament yesterday afternoon, we have taken the opportunity to review the document and provide some immediate comments of the key question of coverage.  Put simply, now that we know the detail, who will the Bill apply to and from when?

Timing

Clearly to be a matter of much public debate, at least in so far as the Bill is concerned, the first issue of from when the scheme will operate is quite simple. The Bill provides that from 1 July 2010, the mandatory requirements of the CPRS Cap and Trade system of Australian Emissions Units will commence.

Structure of the Bill

In very general terms, the Bill does the following:

• provides a framework for the creation (by virtue of separate legislation) of the Australian Climate Change Regulatory Authority to be a separate administering the Bill;
• provides for the Federal Government to set the National Scheme Cap (Clause14) – the maximum quantity of greenhouse gas to be emitted within a specified financial year (determined by Regulation);
• determines who will take responsibility for greenhouse gas emissions, both in terms of group structures, part ownership of facilities and potential upstream and downstream emissions;
• provides for the issue of Australian emissions units and the procedure for the surrender of the Australian emissions units;
• introduces the Emissions Intensive Trade Exposed (EITE) assistance program; and
• provides for the issue of Australian emissions units in respect of coal fired, electricity generation.

The Bill also (amongst other provisions) introduces penalties for non-compliance and monitoring and review procedures.

The Bill’s relationship with the National Greenhouse and Energy Report (NGER) Act 2007

The sister legislation to the Bill, the NGER Act, is maintained as a central piece of legislation in the Federal Government’s Carbon Pollution Reduction Scheme.  Importantly, a number of key definitions that trigger the reporting obligations under the NGER Act are grandfathered into the operation of the Bill (and a variety of others are being introduced into the NGER Act as part of the current suite of proposed legislation).  Before determining the coverage of the Bill, it is necessary to make some comment on the effect of the NGER Act on those who produce emissions and use energy.

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