Commonwealth of Australia Explanatory Memoranda

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RENEWABLE ENERGY (ELECTRICITY) AMENDMENT BILL 2009

                              2008-2009




 THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA



                  HOUSE OF REPRESENTATIVES



RENEWABLE ENERGY (ELECTRICITY) AMENDMENT BILL 2009



      SUPPLEMENTARY EXPLANATORY MEMORANDUM


                          Amendments and
        New Clauses to be moved on Behalf of the Government


 (Circulated by authority of the Minister for Climate Change and Water,
                 Senator the Honourable Penny Wong)
      RENEWABLE ENERGY (ELECTRICITY) AMENDMENT BILL 2009

OUTLINE

This amendment will allow partial exemptions under the renewable energy target (RET)
scheme to apply to activities prescribed by regulation.

The Renewable Energy (Electricity) Amendment Bill 2009 currently provides partial
exemptions in respect of electricity used in undertaking emissions-intensive
trade-exposed (EITE) activities as defined under the EITE assistance program under the
CPRS legislation. Partial exemptions from the RET liability would not commence until
section 3 of the Carbon Pollution Reduction Scheme Act 2009 commences.

The policy rationale for providing assistance for all entities undertaking EITE activities is
the combined cost impact of the RET and CPRS on trade-exposed industries.

This amendment will allow partial exemptions to be provided to activities as prescribed
in the RET scheme regulations. It is the Government's policy intent that, in the absence
of legislation implementing a carbon price, assistance under the RET is targeted at those
EITE activities that are highly electricity-intensive and therefore face a high cost impact
from the RET alone.

Activities eligible for interim RET assistance will be a sub-set of EITE activities that
have been assessed as having an electricity intensity above a threshold of
3,000 megawatt-hours (MWh) per $ million revenue (or $9,000 MWh per $ million
value-added). The Government will undertake a formal data collection process to assess
eligible activities. Eligible activities are likely to include aluminium smelting, silicon
production and newsprint manufacturing.

When the CPRS legislation and enabling regulations come into force, partial exemptions
will apply in respect of EITE activities as defined under the EITE assistance program.

Financial impact statement

This amendment will not have a financial impact on the Commonwealth.




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      RENEWABLE ENERGY (ELECTRICITY) AMENDMENT BILL 2009


NOTES ON CLAUSES

Clause 2 - Commencement

1. This clause inserts an amendment to the commencement date for Schedule 2 of the
   Bill. The amendment provides that Schedule 2 is to commence at the same time as
   Schedule 1, that is, on the day on which the Act receives Royal Assent.


   SCHEDULE 2 - PARTIAL EXEMPTIONS FOR LIABILITY TO CHARGE

Item 2 - Subsection 5(1)

2. This item amends the definition of `emissions-intensive trade-exposed activity'.

   The amended definition provides that if regulations are made for the purpose of
   subsection 167(1) of the Carbon Pollution Reduction Scheme Act 2009, an
   emissions-intensive trade-exposed activity is taken to be an emissions-intensive trade-
   exposed activity under the emissions-intensive trade-exposed assistance program.

   However, if no regulations are made for the purpose of subsection 167(1) of the
   Carbon Pollution Reduction Scheme Act 2009, the meaning of emissions-intensive
   trade-exposed activity for the purpose of the Renewable Energy Target scheme will
   be as prescribed in the regulations.

Item 22 - Transitional regulations

3. This item inserts provisions to empower the making of transitional regulations
   relating to the transition of the definition of `emissions-intensive trade-exposed
   activity' from that definition prescribed in the regulations, to the definition under the
   emissions-intensive trade-exposed assistance program under the Carbon Pollution
   Reduction Scheme Act 2009.




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