17 Apr 2012
Carbon Pricing Scheme - Some Important Concepts
From 01 July 2012, you will need to know and understand important “carbon tax” concepts. The first step is to understand that the “carbon tax” is not really a tax, but a carbon pricing scheme.
The carbon pricing scheme is made up of several pieces of legislation and regulations, each dealing with different components of the scheme. There are a number of new concepts and important terminology which are critical to understanding the carbon pricing scheme.
Take this general statement for example:
Under the carbon pricing scheme, liable entities need to acquire and surrender carbon units of a value equal to the total emissions emitted by facilities of which they have operational control.
You may already have a fair idea of what a "carbon unit" is, but what about the other words in bold? Let's briefly consider what meaning they have under the Clean Energy Act 2011 (Cth):
Facility includes an activity or a series of activities that involve the production of greenhouse gas emissions, the production of energy or the consumption of energy. This covers nearly every industry, including manufacturing, factories, office buildings, local councils and the list goes on.
Operational Control occurs where an entity has the authority to introduce or implement the operating, health and safety and environmental policies of a facility. There can be only one entity with operational control over a facility at any one time, and this may not always be the owner. It's important that your contracts deal with this issue correctly.
Liable Entity is an entity which has operational control of a facility which exceeds the threshold test (currently 25,000 tonnes) during a financial year. This is aimed at the "top 500 polluters".
As we approach the kick-off date for the carbon pricing scheme on 01 July, we'll continue to keep you updated with new concepts and important details you need to know to understand the scheme.
Would you like to know more? Please contact Robert Shepley on (03) 8615 9953 or by email at robert.shepley@mk.com.au.
