Mandatory Environmental Trading Schemes Operating in Australia

Transcription

1 Mandatory Environmental Trading Schemes Operating in This note covers six environmental trading schemes operating in : two national schemes ( and, being developments of MRET/RET) and four State-based schemes (, NSW, NSW and the Gas Scheme). South introduced a version of the scheme from 1 January 2009, via licence obligations imposed on retailers rather than a formal trading scheme and this scheme is not therefore included in this note. The ACT has a Greenhouse Gas Abatement Scheme modelled on the original NSW (that is, including the element). Recognising the need to facilitate trading among scheme participants, the n Financial Markets Association established an Environmental Products Committee which, together with Johnson Winter & Slattery, produced: 1 an Environmental Products section to the AFMA Guide to n OTC Transactions comprising standard confirmations, a commentary and an n Environmental Products Addendum, which sets out the terms for trading the certificates (Environmental Products) created by the schemes; and 2 a contract for the spot trading of Environmental Products. In addition, AFMA publishes a subscription-based service providing weekly spot and forward prices for Large-Scale Certificates (LRECs), NSW Greenhouse Abatement Certificates (NGACs) and Gas Electricity Certificates (GECs). Sample data is available on the AFMA website The AFMA Environmental Products section has been updated over time to reflect the creation of new schemes and the closure of old schemes. AFMA also established a Carbon Markets Committee to focus on the policy issues surrounding the then-proposed Carbon Pollution Reduction Scheme (CPRS). The CPRS, had it become law, would have started in The Carbon Markets Committee produced a Carbon section to the AFMA Guide to n OTC Transactions comprising a standard Part 6 to the ISDA Schedule and a standard confirmation for trading carbon permits (including Kyoto permits). The Carbon Markets Committee has been reconvened in 2011 to consider issues surrounding the Carbon Price Mechanism, the successor to the CPRS proposed in 2011 with a target starting date of July For further information please contact: Amanda Seaton Direct: +61 (8) amanda.seaton@jws.com.au

2 2 Mandatory Environmental Trading Schemes Operating in May 2011 Legislation (Electricity) Act 2000 (Cth) (Electricity) Act 2000 (Cth) n Energy Efficiency Target Act 2007 (VIC) Electricity Supply Act 1995 (NSW) Electricity Supply Act 1995 (NSW) Electricity Act 1994 (QLD) Title Large-Scale Renewable Energy Target () Small-Scale Renewable Energy Scheme () n Energy Efficiency Target Scheme () or Energy Saver Incentive Greenhouse Gas Reduction Scheme () Energy Savings Scheme () Gas Scheme Purpose Encourage 41,000 GWh of new generation of electricity from large scale renewable energy projects such as wind farms, commercial solar and geothermal power stations by 2020 Encourage investment in small scale renewable technologies such as solar panels and solar water heaters There is no target or cap Reduce greenhouse emissions through energy efficiency measures for retail users For , the target is to achieve a reduction of 2.7 million tonnes of CO 2-e per annum Encourage reductions in greenhouse gas emissions associated with electricity generation and encourage activities to offset greenhouse gas emissions to achieve 7.27t CO 2-e per person Create a financial incentive to reduce the consumption of electricity by retail and business users The 2010 target is 2.5% of liable annual sales, stepping up to 5% for Diversify s energy mix towards the greater use of gas fired generation The 2011 target is 15% and can step to 18% by 2019 Scheme administrator Office of the Regulator (ORER) Office of the Regulator (ORER) Essential Services Commission (ESC) Independent Pricing and Regulatory Tribunal of NSW (IPART) Independent Pricing and Regulatory Tribunal of NSW (IPART) Chief Executive of the Department administering the Electricity Act 1994 Certificates Large-Scale Generation Certificates (LGCs) Also known as LRECs Small-Scale Technology Certificates (STCs) Also known as SRECs n energy efficiency certificates (VEECs) NSW Greenhouse Gas Abatement Certificate (NGACs) NSW Energy Saving Certificates (ESCs) Gas Electricity Certificates (GECs)

3 3 Mandatory Environmental Trading Schemes Operating in May 2011 Register er Records creation, registration, transfer and surrender Start date Termination Date Review date Activities creating certificates Register of Large-Scale Generation Certificates: 1 January 2011 for the split scheme ( and ) MRET started 1 January 2001 Register of Small-Scale Technology Certificates: 1 January 2011 for the split scheme ( and ) MRET started 1 January 2001 Registers maintained by the ESC: v.au/public//regi sters.htm & Registry: & Registry: Gas Scheme Registry: ndgasscheme.qld.gov.au /genpub/enterregistry. aspx 1 January January July January December December December 2029 On a date to be proclaimed, linked to the start of a national scheme Every 2 years from 30 June 2012 Generation of electricity from accredited renewable energy power stations above the baseline Every 2 years from 30 June 2012 Generation of electricity from eligible installations of solar water heaters, including air source heat pump water heaters, and small-scale solar photovoltaic panels, wind and hydro systems Earlier of 31 December 2020 or start of a national scheme By 31 December 2011 Not applicable Every 5 years from 1 July 2009 Prescribed activities include modifying, replacing, purchasing or installing equipment which results in greater efficiency, reduced consumption of electricity and gas and/or a reduction of greenhouse gas emissions Abatement activities cover less emissions intensive generation, on-site generation and projects to store carbon from the atmosphere in forests Recognised Energy Savings Activities (RESAs) must reduce electricity consumption compared to a baseline and includes installation of high efficiency products Generation earns certificates until 31 December 2019 Scheme expires 31 December 2020 Not applicable Generation of electricity from natural gas, coal seam gas (including waste coal mine gas), liquefied petroleum gas and waste gases associated with conventional petroleum refinery (above a baseline)

4 4 Mandatory Environmental Trading Schemes Operating in May 2011 Calculation of entitlement Certificate creators Registration fee Timing restrictions on certificate creation 1 MWh = 1 LGC Up to 30 June 2015, the number of STCs per MWh is determined by applying a multiplier which may change each year The nominated person for an accredited renewable energy power station If equal or less than 250 certificates nil 251 or more certificates 8 cents per certificate LGCs and STCs must be created by the end of the year after the year of referable generation or any later date allowed by the ORER Registered owners of solar water heaters and small generating units The owner may assign the right to create certificates to another person If equal or less than 250 certificates nil 251 or more certificates 8 cents per certificate, but will increase to 47 cents for small generating units LGCs and STCs must be created by the end of the year after the year of referable generation or any later date allowed by the ORER 1t CO2-e abated = 1 VEEC Accredited persons in respect of prescribed activities 1t CO 2-e abated = 1NGAC Accredited Certificate Providers in respect of abatement activities 1t CO 2-e abated = 1 ESC Accredited Certificate Providers in respect of RESAs 1 MWh = 1 GEC Accredited generators $1.00 per certificate $0.15 per certificate $0.70 per certificate $ per certificate (CPI indexed) A certificate must be created not later than 6 months after the end of the year in which the prescribed activity was undertaken VEECs expire after six years NGACs must be created and registered within 6 months of the end of the calendar year in which the activity occurred ESCs must be created and registered within 6 months of the end of the calendar year in which the activity occurred A GEC must be created within 12 months of the month in which the referable electricity was generated

5 5 Mandatory Environmental Trading Schemes Operating in May 2011 Geographical restrictions on the creation of certificates The generation of electricity must be in The generation of electricity must be in The activity must take place in or another State or Territory with a similar approved energy efficiency scheme NGACs from low emitting generation must be from power stations connected to a registered transmission or distribution system in the National Electricity Market The activity must take place in NSW or another State or Territory with an approved corresponding scheme Generation output must support load so in effect is restricted to transmission zones in and Northern NSW Demand side activities must be in NSW/ACT and forests in NSW Double dipping No restrictions related to other schemes LRECs not surrendered under the are eligible to be used in the GreenPower scheme ( au) No restrictions related to other schemes Not specified A NGAC cannot be created if the MWh of referable generation or abatement has been used to create a certificate under another scheme A ESC can not be created if an NGAC has already been created in respect of that activity A GEC cannot be created if the referable generation created an NGAC or a certificate under a similar scheme

6 6 Mandatory Environmental Trading Schemes Operating in May 2011 Liable Parties with acquittal obligations Electricity retailers and end use customers who purchase electricity directly from AEMO or from a generator (including generation for onsite use) Electricity retailers and end use customers who purchase electricity directly from AEMO or from a generator (including generation for onsite use) Electricity or gas retailers which have 5000 or more customers in NSW electricity retailers, electricity generators selling directly to customers, market customers in respect of a market load for use in NSW, and large customers or persons carrying out significant State development who elect to be liable NSW electricity retailers, electricity generators selling directly to customers, and market customers taking supply directly from the NEM Electricity retailers and end use customers (purchase electricity directly from a generator) who purchase electricity for consumption in (including generation for onsite use) Reporting, surrender and shortfall payment process energy acquisition statement and surrender LGCs equal to the Liable Quantity or pay the large-scale generation shortfall charge for any shortfall by 14 February (for the previous year) Quarterly process: Calculation of the small-scale technology shortfall for each quarter, with the shortfall for each quarter giving the annual total Annual process: Annual report and payment of the shortfall charge by 14 February (for the previous year) energy acquisition statement showing relevant acquisitions and VEECs surrendered, by 30 April (for the previous year) The ESC issues a statement for payment of any shortfall charge a Greenhouse Gas Benchmark Statement showing liability, NGACs surrendered, any shortfall and any penalty payable by 18 March (for the previous year) an Annual Energy Savings Statement showing liability, ESCs surrendered, any shortfall and any penalty payable by 18 March (for the previous year) Annual Process: GECs must be surrendered by the last business day in April The penalty imposition day for any shortfall is 30 June

7 7 Mandatory Environmental Trading Schemes Operating in May 2011 Carry forward Certificate surrender fee Shortfall charge Registry statistics (from 2009 scheme reports) Up to 10% carry forward No carry forward of liability No carry forward of liability Up to 10% carry forward (nil in 2007) Up to 50% carry forward for 2009, reduced to 10% from 2010 Can be changed by regulation 8 cents per certificate 8 cents per certificate nil nil nil nil $65 per LGC $65 per STC $40.00 per VECC for 2010 For 2009, 16.2 million RECS were created Disaggregated figures for large/small generation not included As for For 2009, 3.9 million VEECs were created $14.00 per NGAC for 2010 and rising each year, plus CPI escalation For 2009, million NGACs were created $23.03 for 2010, adjusted by CPI each year For 2009 (half year) 0.28 million ESCs were created No carry forward of liability $13.15 for 2010, escalated annually by the change in CPI For 2009, 5.64 million GECs were created Important Disclaimer: The material contained in this article is comment of a general nature only and is not and nor is it intended to be advice on any specific professional matter. In that the effectiveness or accuracy of any professional advice depends upon the particular circumstances of each case, neither the firm nor any individual author accepts any responsibility whatsoever for any acts or omissions resulting from reliance upon the content of any articles. Before acting on the basis of any material contained in this publication, we recommend that you consult your professional adviser. Ref: