Clean energy legislation

The Clean Energy Legislative Package is now law. It sets out the way that Australia will introduce a carbon price to reduce Australia's carbon pollution and move to a clean energy future.

For more information about the legislation, including the text of the bills as passed, explanatory memorandums, second reading speeches and parliamentary debates, please visit the relevant bill homepage on the Australian Parliament's website.

The legislation has now received the Royal Assent and the various Clean Energy Acts are available on the Australian Government's Comlaw website.

The legislation:

  • implements the carbon pricing mechanism for Australia to reduce carbon pollution and move to a clean energy future
  • sets out how the carbon pricing mechanism will be run, and what businesses will have to do
  • links the carbon price to the Carbon Farming Initiative and to credible schemes overseas
  • provides for assistance to emissions intensive and trade exposed industries through the Jobs and Competitiveness Program and to electricity generators to ensure energy security
  • excludes emissions from agriculture, the land sector, and the combustion of biomass, biofuels and biogas from the mechanism
  • sets up a Clean Energy Regulator to administer the carbon pricing mechanism, the National Greenhouse and Energy Reporting scheme, the Renewable Energy Target and the Carbon Farming Initiative
  • sets up an independent Climate Change Authority, which will advise the Australian Government on the setting of carbon pollution caps and periodic review of the carbon pricing mechanism and other climate change laws
  • applies an effective carbon price to transport fuels used in rail, shipping and aviation (fuels used by motorists and in light commercial vehicles are excluded), to off-road use of transport fuels by businesses (other than in the agricultural, forestry and fishery industries), and to synthetic greenhouse gases
  • provides a refundable tax offset for conservation tillage equipment, and
  • assists those Australian households that need it most, including pensioners and low- and middle-income earners.

The Clean Energy Legislative Package and related legislation

Clean Energy Act 2011—commenced on 2 April 2012

The Clean Energy Act 2011 is the central Act of the Package. It sets up the carbon pricing mechanism (the mechanism) and deals with assistance for emissions-intensive trade-exposed industries (the Jobs and Competitiveness Program) and the coal-fired electricity generation sector.

It contains rules for who is covered, the Opt-in Scheme as well as what sources of carbon pollution are included, the obligation to surrender emissions units, caps on the amount of carbon pollution from 1 July 2015, international linking, monitoring, enforcement, appeal and review provisions.

Clean Energy Regulator Act 2011—commenced on 2 April 2012

The Clean Energy Regulator Act 2011 sets up the Clean Energy Regulator as a statutory authority that will administer the carbon pricing mechanism, National Greenhouse and Energy Reporting Scheme, the Renewable Energy Target and the Carbon Farming Initiative.

Climate Change Authority Act 2011—commences on 1 July 2012

The Climate Change Authority Act 2011 sets up the Climate Change Authority, which will begin on 1 July 2012. The Authority will advise the Australian Government on the setting of carbon pollution caps and periodic review of the carbon pricing mechanism and other climate change laws.

This Climate Change Authority Act 2011 also sets up the Land Sector Carbon and Biodiversity Board, which will advise on the implementation of land sector measures.

Clean Energy (Consequential Amendments) Act 2011

Different parts of the Clean Energy (Consequential Amendments) Act 2011 will start at different times, depending on the element of the mechanism to which they relate or the specific legislation that it amends.

This Act makes amendments to other laws to ensure that the mechanism is integrated with existing laws, regulatory schemes and processes. It includes changes that ensure:

  • the National Greenhouse and Energy Reporting scheme supports the mechanism (the consolidated NGER Acts as of 2 April 2012 and 1 July 2012, are now available on Comlaw)
  • the Australian National Registry of Emissions Units covers the mechanism, as well as the Carbon Farming Initiative
  • the Regulator covers the mechanism, Carbon Farming Initiative, the Renewable Energy Target and the National Greenhouse and Energy Reporting scheme
  • the Regulator and Authority are set up as statutory agencies and regulated by public accountability and financial management rules
  • that carbon units and their trading are covered by laws on financial services and regulated by the Australian Securities and Investment Commission
  • that activities related to emissions trading are covered by laws on money laundering and fraud
  • synthetic greenhouse gases are covered by an effective carbon price by extending existing Regulation of those substances
  • the taxation treatment of emissions units for the purposes of GST and income tax is clear, and
  • the Regulator can work with other regulatory bodies, including the Australian Securities and Investments Commission, the Australian Competition and Consumer Commission and Austrac.

The following Acts commence on 1 July 2012 unless otherwise provided for.

These Acts cover:

  • imposing an effective carbon price on aviation and non-transport gaseous fuels through excise and customs tariffs
  • reducing the business fuel tax credit entitlement of non-exempted industries for their use of liquid and gaseous transport fuels, in order to provide an effective carbon price on business through the fuel tax system.

The following Acts commence on 14 May 2012 and on various dates thereafter.

On 10 July 2011 the Australian Government announced household assistance measures to help Australians adjust to a low emissions economy on 10 July 2011.

These Acts will make law the household assistance measures, including:

  • higher payments to pensioners, veterans, self-funded retirees and families, assistance to aged-care residents and new assistance through the Essential Medical Equipment Payment, the Low Income Supplement and the Single Income Family Supplement
  • tax cuts to assist low and middle income families, by tripling the tax free threshold from $6000 to $18 200 in 2012–13 and adjusting the first two marginal tax rates, and
  • a further increase in the tax-free threshold from $18 200 to $19 400 in 2015–16.

Measures being delivered administratively or through other legislation

Support for innovation in renewable energy and clean energy

The legislation implementing the Australian Renewable Energy Agency was passed in November 2011.

The Clean Energy Finance Corporation legislation will take into account the report of the Chair on the investment mandate and detailed governance arrangements for the Clean Energy Finance Corporation.

Most of the funding initiatives will be delivered as part of the Budget process.

The Australian Government will introduce legislation to deliver assistance to promote the development and adoption of new low emissions and energy efficient technologies. The Australian Government announced the detail of these changes on 10 July 2011.

These bills will make law these measures, including the:

  • Clean Energy Finance Corporation—will invest in the development of new renewable energy, energy efficiency and low emissions technologies and the transformation of existing manufacturing businesses to help them meet demand for these new activities, and
  • Australian Renewable Energy Agency—a new independent statutory agency responsible for funding new renewable energy projects, which will take over existing national renewable energy initiatives.

A number of the industry and business assistance measures are also designed to promote innovation in clean energy (see below).

Industry and business assistance

The Steel Transformation Plan Act 2011 received Royal Assent on 18 November 2011 and commenced on 4 December 2011.

The legislation implementing these changes will start before 1 July 2012 where the relevant body or program starts on 1 July 2012.

Most of the funding initiatives will be delivered as part of the Budget process.

The Australian Government will deliver assistance to help businesses adjust to a low emissions economy and take advantage of the opportunities that this will create for them. The Australian Government announced the detail of these changes on 10 July 2011.

Specific bills will make law:

  • the Steel Transformation Plan to assist Australia's steelmakers adjust to a low emissions economy—legislation was introduced into the Parliament on 13 September 2011, and
  • an increase the small business instant asset write-off threshold to $6500 for depreciating assets.

The Australian Government will also administratively implement:

  • grants to industry associations and non-government organisations to deliver information about energy efficiency to small and medium businesses and community organisations
  • the Clean Technology Investment Program to deliver grants for manufacturing businesses to investing energy efficiency capital equipment and low emissions technologies, processes and products
  • the Clean Technology Food and Foundries Investment Program to deliver grants for metal forging, foundry and food businesses to invest in energy efficiency capital equipment and low emissions technologies, processes and products
  • the Clean Technology Innovation Program to deliver grants for research into innovation in low emissions technologies, processes and products
  • the Clean Energy Skills Program to deliver funding to education providers on new workplace skills to deliver low emissions technologies, processes and products
  • the Clean Technology Focus for Supply Chains Program to deliver funding to promote and assist businesses to reduce the emissions intensity of supply chain logistics, and
  • the Coal Sector Jobs Package to assist the most emissions-intensive coal mines and Coal Mining Abatement Technology Support Package to assist the coal industry implement abatement technologies.

Household and community assistance

Funding initiatives will be delivered as part of the Budget process.

The Australian Government will assist people and communities adjust to a low emissions economy and take advantage of the opportunities that this will create for them through:

  • an expansion of the Low Carbon Communities Program which will assist low-income households increase their energy efficiency and reduce energy costs, and will support local government and community organisations to assist them
  • improved advice to households on energy efficiency and clearer information on government assistance, and
  • the Remote Indigenous Energy Program to deliver financial support to build renewable energy generation in around 55 remote Indigenous communities.

Transport measures

Mandatory vehicle emissions standards will be introduced to significantly reduce the average CO2 emissions for light vehicles in Australia.

Regulations to introduce this new standard are being developed.

Regional structural adjustment assistance

The Australian Government will set up a Regional Structural Adjustment Assistance Program to make funding available to assist regions strongly affected by the introduction of a carbon price.

Funding initiatives will be delivered as part of the Budget process.

Land sector measures

The Australian Government will deliver a wide range of measures to help rural communities benefit from the carbon market and support restoration and protection of biodiverse landscapes. These measures include:

  • the Carbon Farming Initiative Non-Kyoto Carbon Fund to purchase non-Kyoto compatible Carbon Farming Initiative carbon credits that cannot be used to meet liabilities under the carbon price mechanism
  • the Carbon Farming Futures Fund to deliver funding, with the advice of the Land Sector Carbon and Biodiversity Board, to help land managers benefit from abatement and sequestration practices by encouraging research, developing better estimation methods, funding on-farm abatement, fostering greater awareness of abatement and sequestration practices and the conservation tillage tax offset
  • the Biodiversity Fund to deliver funding, with the advice of the Land Sector Carbon and Biodiversity Board, to restore and protect biodiverse carbon stores
  • the Regional Natural Resources Management Planning for Climate Change Fund to help regional natural resources management (NRM) organisations update plans to consider the impacts of climate change and maximise the benefits of biodiverse carbon stores and carbon farming projects
  • the Indigenous Carbon Farming Fund to support Indigenous communities that are interested in implementing carbon farming projects
  • the Carbon Farming Skills Initiative to ensure that landholders can access credible, high quality advice and carbon services
  • the removal by Regulation of native forest wood waste from eligible renewable energy sources under the Renewable Energy Target with transitional arrangements for existing accredited power stations.

Further information

For more information, call the Clean Energy Future information line on 1800 057 590 or visit Clean Energy Future.

For more information about the Clean Energy Regulator, visit www.cleanenergyregulator.gov.au