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Australia – Carbon Price Update: Deadlines Loom Amidst Political Uncertainty.

15 May, 2013

 

Legal News & Analysis – Asia Pacific – Australia – Environment

 

 

There is uncertainty for the future of carbon regulation in Australia, which will not be resolved until after the 14 September 2013 election.

 

However, in the meantime, until the Carbon Price legislation is repealed or amended, it continues to apply. Several key reporting and payment dates are looming in May and June 2013. Significant penalties can apply for noncompliance.

 

This article:

 

  • Outlines the key upcoming deadlines and consequences; and
  • Introduces the key political uncertainties.

 

Deadlines and consequences

 

The following key reporting and payment dates are looming in May and June 2013:

 

 

Date

Action/event

Consequences

1 May 2013

Liable Entity interim registration: Any entity which, as at 1 April 2013, is or may reasonably be expected to be a Liable Entity and which has an Interim Emissions Number for FY12-13 must apply to be registered under NGERS (if not already registered).

An Interim Emissions Number will not arise if no NGERS report was required in relation to the Facility for the FY11-12.

$1.1m & $11k/day

17 June 2013

Liable Entity interim report: Any Liable Entity with an FY12-13 Interim Emissions Number must report.

$1.1m & $11k/day

17 June 2013

Liable Entity interim surrender: Any Liable Entity with an FY12-13 Interim Emissions Number must surrender units equal to the Interim Emissions Number.

Incur Provisional Unit Shortfall Charge of $29.90/t (= 130% x $23/t).

24 June 2013

Liable Entity interim Unit Shortfall Charge: Any Liable Entity with a Provisional Unit Shortfall Charge must pay it.

Late payment penalty of 20% pa.

 
 

We can provide further information on these key events, or on other Carbon Price dates for the 2012/13 financial year, if that would assist.

 

Political uncertainty

 

A number of factors will influence whether the Carbon Price legislation can be repealed or amended and whether any alternative policy can be pursued, such as the Coalition‘s ‘Direct Action Plan’.

 

Assuming that the Coalition wins Government in the Lower House at the 14 September 2013 election, the Senate numbers will be crucial to whether a Coalition Government can repeal or amend the Carbon Price legislation. New Senators elected at the election will only take their seats from 1 July 2014. The ALP and Greens will still control the Senate until then based on the current Senate numbers.

 

After 14 September 2013, the key questions will be:

 

  1. Will the ALP and Greens allow repealing or amending legislation to be passed prior to 1 July 2014? This seems unlikely.
  2. Will the Coalition, with other minor parties, secure control of the Senate on 1 July 2014 so as to allow repealing or amending legislation to be passed after that date? This is possible but would be difficult. This difficulty is due to a number of factors, including the Senate’s State and Territory based proportional voting system. That system makes it difficult for the Coalition or ALP to have a majority in the Senate and in particular difficult to change the Senate balance at usual half Senate elections like the 13 September 2013 election will be, when only half the Senators from each State and Territory will be up for election. If the Coalition is not able to pass repealing or amending legislation then a further Double Dissolution election would be required. That process may take several years, possibly only after the Carbon Price has moved to emissions trading when cheaper international units can be used.

 

These issues are considered further in a short recording and presentation  here:

 

Implications

 

Until the repeal or amendment of the Carbon Price legislation, which may take time and prove difficult, obligations will continue to apply with significant possible penalties. Businesses operating in Australia must ensure that they comply and consider these obligations in their commercial arrangements, and that they consider the future possibilities as well.  

 

 

For further information, please contact:

 

John Taberner, Partner, Herbert Smith Freehills 

john.taberner@hsf.com

 

Michael Voros, Herbert Smith Freehills 

michael.voros@hsf.com

 

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