Attachment A
Details of the Financial Framework (Supplementary Powers) Amendment
(Climate Change, Energy, the Environment and Water Measures No. 4) Regulations 2023
Section 1 - Name
This section provides that the title of the Regulations is the Financial Framework (Supplementary Powers) Amendment (Climate Change, Energy, the Environment and Water Measures No. 4) Regulations 2023.
Section 2 - Commencement
This section provides that the Regulations commence on the day after registration on the Federal Register of Legislation.
Section 3 - Authority
This section provides that the Regulations are made under the Financial Framework (Supplementary Powers) Act 1997.
Section 4 - Schedules
This section provides that the Financial Framework (Supplementary Powers) Regulations 1997 are amended as set out in the Schedule to the Regulations.
Schedule 1 - Amendments
Financial Framework (Supplementary Powers) Regulations 1997
Item 1 - In the appropriate position in Part 4 of Schedule 1AB (table)
This item adds three new table items to Part 4 of Schedule 1AB to establish legislative authority for government spending on certain activities to be administered by the Department of Climate Change, Energy, the Environment and Water (the department).
New table item 627 establishes legislative authority for government spending on the Powering the Regions Fund--safeguard transformation stream (STS), which aims to support decarbonisation at trade-exposed industrial facilities covered by the Safeguard Mechanism.
The STS is one of four funding streams of the Powering the Regions Fund (PRF) with administered funding totalling $1.4 billion announced in the 2023-24 Budget. The PRF is part of the Powering Australia plan, the Government's 2022 election commitment for Australia to become a renewable energy superpower and to reduce emissions to 43 per cent below 2005 levels by 2030, and net zero by 2050. The Powering Australia Plan is focused on creating jobs, cutting power bills and reducing emissions by boosting renewable energy.
The objectives of the PRF are to support industrial decarbonisation and new clean energy developments, as well as supporting regional economies and workforces in the transformation to net zero by 2050. Specifically, the PRF has four objectives, which are to:
- decarbonise existing industries;
- foster new clean energy industries;
- support workforce development; and
- fund continued purchase of Australian Carbon Credit Units (ACCUs).
The final program objective of continuing the purchase of ACCUs is dealt with through the Clean Energy Regulator's ACCUs Scheme. The ACCUs Scheme (formerly known as the Emissions Reduction Fund) offers landholders, communities and businesses the opportunity to run projects in Australia that avoid the release of greenhouse gas emissions or remove and sequester carbon from the atmosphere. It is enacted through the Carbon Credits (Carbon Farming Initiative) Act 2011 and the Carbon Credits (Carbon Farming Initiative) Rule 2015. Further details on this scheme can be found at Australian carbon credit units (cleanenergyregulator.gov.au).
The intended outcomes of the PRF are to reduce industrial sector emission and to increase the production of clean energy in the regions. The PRF also aims to reduce the risk of carbon leakage for entities covered by the Safeguard Mechanism provided in the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rule 2015 (Safeguard Mechanism Rule) and support workforce and regional development in line with Australia's ambition to become a renewable energy powerhouse.
The PRF four funding streams are:
- Industrial Transformation Stream (ITS);
- Safeguard Transformation Stream (STS);
- Critical Inputs to Clean Energy Industries - Cement, Lime, Alumina and Aluminium Sectors; and
- Critical Inputs to Clean Energy Industries - Primary Steel Production Sector.
The ITS will be delivered by the Australian Renewable Energy Agency under existing legislative authority from the Australian Renewable Energy Agency Act 2011.
The STS was announced by the Minister for Climate Change and Energy, the Hon Chris Bowen MP on 10 January 2023 (https://minister.dcceew.gov.au/bowen/media-releases/next-steps-safeguard-australian-industry-and-regions-net-zero-global-economy).
The STS supports the reduction of emissions at trade exposed Safeguard facilities consistent with their obligations under the Safeguard Mechanism Reforms. The reforms to the Safeguard Mechanism will reduce emissions at Australia's largest industrial facilities and maintain their international competitiveness as the world decarbonises.
The STS is open to owners or operators of facilities covered by the Safeguard Mechanism Rule, which are trade-exposed Safeguard Mechanism facilities. These industrial facilities emit more than 100,000 tonnes of carbon dioxide equivalent (tCO2e) of covered emissions in a financial year and produce a trade-exposed production variable listed at Schedule 2 of the Safeguard Mechanism Rule. The kinds of production variables that are considered trade exposed include coal, iron and steel, oil and gas, aluminium, glass, clinker and lime, glass and paper. For example, a large coal mine or aluminium smelter is likely to be classed as a trade-exposed Safeguard Mechanism facility.
Grant funding of $600.0 million over three years from 2023-24 will be provided over two rounds, with each round providing successful applicants with grant funding of between $500,000 and $50.0 million to:
- support trade-exposed facilities covered by the Safeguard Mechanism to reduce their emissions and contribute to meeting Australia's 2030 (and 2050) emissions reduction targets;
- reduce the risk of carbon leakage, where production shifts from a country with more ambitious emissions reduction policies to others with less stringent policies; and
- provide skills development to existing industrial workforce in new equipment or processes that contribute to the reduction of scope 1 emissions. Scope 1 greenhouse gas emissions are the emissions released to the atmosphere as a direct result of an activity, or series of activities at a facility level. Scope 1 emissions are sometimes referred to as direct emissions.
Funding is available to successful companies for activities related to decarbonisation, emission reduction, clean energy production, workforce development, and related activities. Eligible projects must:
* be aimed at contributing to Australia's emissions reduction targets by 2030 and of net zero by 2050; and
* have at least $1.0 million in eligible expenditure.
Eligible activities will be expected to directly relate to the project and must include at least one of the following:
* on-site decarbonisation projects that reduce scope 1 emissions at a trade-exposed Safeguard facility, including energy efficiency upgrades, fuel switching and equipment upgrades to enable usage of lower carbon fuels or other inputs (e.g. green metals), reductions in fugitive emissions, and on-site carbon capture and use; or
* off-site shared user infrastructure that reduces scope 1 emissions at one or more trade-exposed Safeguard facilities including hydrogen and bioenergy production and transport, off-grid electricity production, storage and transmission, and carbon capture, use and storage projects.
The department will deliver the STS in accordance with the requirements of the Commonwealth resource management framework, including the Public Governance, Performance and Accountability Act 2013 (PGPA Act). Funding will be delivered as a
merit-based, competitive grant process and administered by the Business Grants Hub, part of the Department of Industry, Science and Resources compliant with the whole of Commonwealth Government grants administration arrangements, including the Commonwealth Grants Rules and Guidelines 2017 (CGRGs).
The STS Round 1 opened for applications on 9 August 2023, and will close on 1 November 2024, with batched assessments taking place every 6 months. It is anticipated Round 2 will open in 2025 following a mid-program evaluation. Round 2 will be developed following a review of Round 1. Any changes made to the program guidelines between rounds will be focused on ensuring the STS is addressing the intended outcomes and objectives of the program. Grant opportunity guidelines have been developed to govern the operation of the program and is available on GrantConnect (www.grants.gov.au).
Spending decisions will be made by the Minister for Climate Change and Energy, taking into account the recommendations of a PRF Expert Advisory Panel comprised of departmental Senior Executive Service (SES) officers and independent experts drawn from diverse fields including science, industry, finance, engineering and climate change.
Applications will be assessed against the eligibility criteria and merit criteria set out in the grant opportunity guidelines. All applications submitted will be assessed by the Business Grants Hub against the eligibility criteria prior to the Expert Panel assessing merit.
Persons otherwise affected by decisions or who have complaints about the STS may provide feedback to the department. The department will investigate complaints in accordance with its complaints policy and procedures. If a person is not satisfied with the way the department handles the complaint, they may lodge a complaint with the Commonwealth Ombudsman.
Funding decisions made in connection with the STS are not considered suitable for independent merits review, as they are decisions relating to the allocation of a finite resource and an allocation already made from the PRF would be affected by overturning the original decision. The Administrative Review Council (ARC) has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the guide, What decisions should be subject to merit review? (ARC guide)).
In addition, the review and audit process undertaken by the Australian National Audit Office (ANAO) provides a mechanism to review Australian Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.
Further, the right to review under section 75(v) of the Constitution and review under section 39B of the Judiciary Act 1903 may also be available. Persons affected by spending decisions would also have recourse to the Commonwealth Ombudsman where appropriate.
The department undertook extensive stakeholder consultation on the design of the PRF from November 2022 to February 2023. This included online and in-person sessions with industry, investors, state, territory and local governments, unions, and First Nations and regional representatives. Relevant Commonwealth departments were also consulted to ensure the PRF complemented other initiatives. A Consultation Update Paper was released in January 2023, which received 78 written submissions. Stakeholders were supportive of the program and its objectives, with the final design of the programs reflecting stakeholders' feedback.
Further detail on this consultation is available at https://consult.dcceew.gov.au/powering-the-regions-fund.
Administered funding of $1.4 billion for the PRF was included in the 2023-24 Budget under the measure 'Powering the Regions Fund - final design', for a period of nine years commencing in 2022-23. Details are set out in Budget 2023-24, Budget Measures, Budget Paper No. 2 at pages 78-79.
Funding for the STS of $611.8 million over eight years from 2022-23 will come from Program 1.1: Reduce Australia's greenhouse gas, which is part of Outcome 1. Details are set out in the Portfolio Budget Statements 2023-24, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio at page 40.
Noting that it is not a comprehensive statement of relevant constitutional considerations, the objective of the item references the external affairs power (section 51(xxix)) of the Constitution.
External affairs power
Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'. The external affairs power supports legislation implementing Australia's international obligations under treaties to which it is a party.
Australia has obligations relating to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC).
Article 10(b) of the Kyoto Protocol obliges parties to 'formulate, implement, publish and regularly update national and ... regional programmes containing measures to mitigate climate change and measures to facilitate adequate adaptation to climate change'.
Article 4.2 of the Paris Agreement obliges parties to 'pursue domestic mitigation measures with the aim of achieving nationally determined contributions'.
Article 4.1(b) of the UNFCCC obliges parties to 'formulate, implement, publish and regularly update national and regional programmes containing measures to mitigate climate change by addressing ... emissions of greenhouse gases'. Article 4.1(c) obliges parties to 'promote and cooperate in the development of technologies, practices and processes that control, reduce or prevent ... emissions of greenhouse gases'. Article 4.2(a) obliges parties to 'adopt national policies and take corresponding measures on the mitigation of climate change'.
The program will support investment in clean energy production, decarbonisation, and investment that supports a reduction in greenhouse gas emissions, and removal or reduction of greenhouse gas emissions. In doing so, the program will promote measures to mitigate climate change by addressing emissions in greenhouse gases.
New table item 628 establishes legislative authority for government spending on the Powering the Regions Fund--critical inputs to clean energy industries: cement, lime, alumina and aluminium sectors program (CICEI - CLAAS program), which aims to support decarbonisation planning and action in hard-to-abate sectors.
The CICEI - CLAAS program is one of four funding streams of the PRF with administered funding totalling $1.4 billion announced in the 2023-24 Budget. The PRF is part of the Government's Powering Australia Plan to support the Government's ambition for Australia to become a renewable energy superpower. The PRF aims to support industrial decarbonisation and new clean energy developments, as well as supporting regional economies and workforces in the transformation towards net zero by 2050.
The PRF four funding streams are:
- Industrial Transformation Stream;
- Safeguard Transformation Stream;
- Critical Inputs to Clean Energy Industries - Cement and Lime, and Alumina and Aluminium Sectors; and
- Critical Inputs to Clean Energy Industries - Primary Steel Production Sector.
Funding for the CICEI - CLAAS program was announced by the Minister for Climate Change and Energy on 27 March 2023 (https://minister.dcceew.gov.au/bowen/media-releases/safeguard-mechanism-one-step-closer-parliamentary-passage).
The CICEI - CLAAS program will provide targeted financial assistance for the cement and lime, and alumina and aluminium sectors to help ensure they maintain a presence in Australia and continue to deliver critical inputs for the infrastructure and supply chains needed for Australia to be a renewable energy superpower.
These sectors are hard to abate, and during consultations on the Safeguard Mechanism reforms some companies highlighted they face elevated risks to competitiveness in the near term as options to decarbonise their existing operations are currently limited. Australia's clean energy transition depends on maintaining a reliable supply of critical inputs to new renewable generation, transmission, and other clean energy developments. Sustaining domestic production of these materials over the near to medium term, while the technology and other enablers of decarbonisation mature, will reduce risks to Australia's clean energy transition and in turn help to achieve domestic emissions reduction targets.
Grant funding of $200.0 million over three years from 2023-24 will be available to support the objectives of the CICEI - CLAAS program which are to:
- support and sustain sovereign manufacturing capability during the net zero transformation;
- ensure the continued availability of locally produced, cement, lime, alumina and aluminium, which are critical inputs to the clean energy supply chain;
- support the development of low emissions cement, lime, alumina and aluminium sectors consistent with the Australian Government's climate commitments;
- advance the development of new clean energy industries, aligned with Australia's ambition to become a renewable energy powerhouse;
- reduce the risk of carbon leakage, where production shifts from a country with more ambitious emissions reduction policies to other countries with less stringent policies; and
- encourage collaboration on decarbonisation planning within each hard-to-abate sector.
The intended outcomes of the CICEI - CLAAS program are to:
- continue domestic production of cement, lime, alumina and aluminium, until 2030 and beyond;
- increase deployment and commercialisation of low emissions technologies;
- increase ability for the sectors to contribute to decarbonisation and transformation to net zero, and pursue new clean energy and value-adding opportunities, including export opportunities; and
- assist sectors to have a viable pathway to net zero under existing and emerging technology.
To be eligible for the funding, projects must:
* be aimed at contributing to Australia's domestic manufacturing capability;
* support (directly or indirectly) the broader Australian economy to achieve emissions reduction targets by 2030 and of net zero by 2050; and
* have at least $2.0 million in eligible expenditure.
Eligible activities are expected to directly relate to the project and may include at least one of the following:
* development and/or implementation of a decarbonisation pathway for the cement, lime, alumina, or aluminium sectors or specific facility in a sector;
* feasibility studies into new technologies or new practices to support decarbonisation;
* planning and preparing for the commercial, supply chain, workforce, and/or energy, challenges facing cement, lime, alumina, or aluminium production working towards and in a net zero economy;
* trialling decarbonisation technologies and solutions in the cement, lime, alumina, or aluminium sectors; or
* capital investments projects that bring forward decarbonisation investments that would otherwise not be commercially viable prior to 2030.
Funding is available to successful companies, incorporated entities, associations, not‑for-profit organisations, trustees, Aboriginal and Torres Strait Islander Corporations, and publicly funded research organisations for activities related to decarbonisation, emission reduction, clean energy production and transportation, production of critical inputs such as cement, lime, alumina, and aluminium, workforce development, and related activities.
Capital works associated with the CICEI - CLAAS program must be delivered at a facility covered by the Safeguard Mechanism or in regional Australia (defined as any area outside a Greater Capital City but including Kwinana WA). Regions where eligible projects could be located include the Hunter Valley NSW (aluminium), the Southern Highlands NSW (cement), Gladstone QLD (alumina, aluminium, and cement), Bell Bay TAS (cement), Western Victoria (aluminium) and Kwinana WA (alumina and cement).
Funding will be delivered as a merit-based, competitive grant process. The CICEI - CLAAS program will be administered by the Business Grants Hub and will be compliant with the relevant Commonwealth policy and legislative frameworks including the PGPA Act and the CGRGs.
Grant opportunity guidelines have been developed and are available on GrantConnect (www.grants.gov.au) to govern the operation of the program. The grant round opened for applications on 21 September 2023 and closes on 2 November 2023.
Spending decisions will be made by the Minister for Climate Change and Energy, taking into account the recommendations of a PRF Expert Advisory Panel comprised of departmental SES officers and independent experts drawn from diverse fields including science, industry, finance, engineering and climate change.
Applications will be assessed against the eligibility criteria and merit criteria set out in the grant opportunity guidelines. All applications submitted will be assessed by the Business Grants Hub against the eligibility criteria prior to the Expert Panel assessing merit.
Persons who are otherwise affected by decisions or who have complaints about the program will be able to provide feedback to the department. The department will investigate any complaints about the program in accordance with its complaints policy and procedures. If a person is not satisfied with the way the department handles the complaint, they may lodge a complaint with the Commonwealth Ombudsman.
Funding decisions made in connection with the CICEI - CLAAS program are not considered suitable for independent merits review, as they are decisions relating to the allocation of a finite resource and an allocation already made from the PRF would be affected by overturning the decision. The ARC has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (see paragraphs 4.11 to 4.19 of the ARC guide).
In addition, the review and audit process undertaken by the ANAO provides a mechanism to review Australian Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.
Further, the right to review under section 75(v) of the Constitution and review under section 39B of the Judiciary Act 1903 may also be available. Persons affected by spending decisions would also have recourse to the Commonwealth Ombudsman where appropriate.
The department undertook consultation on the design of the PRF from November 2022 to February 2023. This included online and in-person consultation sessions with industry, investors, state, territory and local governments, unions, and First Nations and regional representatives. Relevant Commonwealth departments were consulted to ensure the PRF complemented other initiatives. A Consultation Update Paper was released in January 2023, which received 78 written submissions. Stakeholders were supportive of the program and its objectives, with the final design of the programs reflecting stakeholders' feedback. Further detail on this consultation is available at https://consult.dcceew.gov.au/powering-the-regions-fund.
Administered funding of $1.4 billion for the PRF was included in the 2023-24 Budget under the measure 'Powering the Regions Fund - final design', for a period of nine years commencing in 2022-23. Details are set out in Budget 2023-24, Budget Measures, Budget Paper No. 2 at pages 78-79.
Funding for the CICEI - CLAAS program of $200.5 million over four years from
2022-23 will come from Program 1.1: Reduce Australia's greenhouse gas, which is part of Outcome 1. Details are set out in the Portfolio Budget Statements 2023-24, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio at page 40.
Noting that it is not a comprehensive statement of relevant Constitutional considerations, the objective of the item references the following powers of the Constitution:
* the external affairs power (section 51(xxix));
* the trade and commerce power (section 51(i)); and
* the Territories power (section 122).
External affairs power
Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'. The external affairs power supports legislation implementing Australia's international obligations under treaties to which it is a party.
Australia has obligations relating to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC).
Article 10(b) of the Kyoto Protocol obliges parties to 'formulate, implement, publish and regularly update national and ... regional programmes containing measures to mitigate climate change and measures to facilitate adequate adaptation to climate change'.
Article 4.2 of the Paris Agreement obliges parties to 'pursue domestic mitigation measures with the aim of achieving nationally determined contributions'.
Article 4.2 of the Paris Agreement obliges parties to 'pursue domestic mitigation measures with the aim of achieving nationally determined contributions'.
Article 4.1(b) of the UNFCCC obliges parties to 'formulate, implement, publish and regularly update national and regional programmes containing measures to mitigate climate change by addressing ... emissions of greenhouse gases'. Article 4.1(c) obliges parties to 'promote and cooperate in the development of technologies, practices and processes that control, reduce or prevent ... emissions of greenhouse gases'. Article 4.2(a) obliges parties to 'adopt national policies and take corresponding measures on the mitigation of climate change'.
The CICEI - CLAAS program will support activities in cement and lime, and alumina and aluminium sectors related to facilitating the use of lower carbon processes and practices, investment in domestic productive capacity, infrastructure and technology. In doing so, the program will promote measures to mitigate climate change by addressing emissions in greenhouse gases.
Trade and commerce power
Section 51(i) of the Constitution empowers the Parliament to make laws with respect to 'trade and commerce with other countries, and among the states'.
The CICEI - CLAAS program will provide funding to recipients who engage in interstate or international trade or commerce, as part of the Australian Government's commitment to support Australia becoming a renewable energy superpower. The program proposes to support activities related to infrastructure and technology, development and/or implementation of decarbonisation pathways, feasibility studies, and trialling decarbonisation technologies and solutions.
Territories power
Section 122 of the Constitution empowers the Parliament to 'make laws for the government of any territory'.
The objectives of the CICEI - CLAAS program are to support industrial decarbonisation and new clean energy developments, as well as supporting regional economies and workforces in the transformation towards net zero by 2050. The program will be available to a wide range of applicants, some of which may operate in the Northern Territory, Australian Capital Territory, or other Australian territories.
New table item 629 establishes legislative authority for government spending on the Powering the Regions Fund--critical inputs to clean energy industries: primary steel production sector program (CICEI - PSPS program), to support domestic primary steel production.
The CICEI - PSPS program is one of four funding streams of the PRF with administered funding totalling $1.4 billion announced in the 2023-24 Budget. The PRF is part of the Government's Powering Australia Plan to support the Government's ambition for Australia to become a renewable energy superpower. The PRF aims to support industrial decarbonisation and new clean energy developments, as well as supporting regional economies and workforces in the transformation towards net zero by 2050.
The PRF four funding streams are:
- Industrial Transformation Stream (ITS);
- Safeguard Transformation Stream (STS);
- Critical Inputs to Clean Energy Industries - Cement, Lime, Alumina and Aluminium Sectors; and
- Critical Inputs to Clean Energy Industries - Primary Steel Production Sector.
Funding for the CICEI - PSPS program was announced together with the CICEI - CLAAS program by the Minister for Climate Change and Energy on 27 March 2023 (https://minister.dcceew.gov.au/bowen/media-releases/safeguard-mechanism-one-step-closer-parliamentary-passage).
The CICEI - PSPS program will provide targeted financial assistance for the primary steel production industry to help ensure this sector maintains a presence in Australia and continues to deliver critical inputs for the infrastructure and supply chains needed for Australia to be a renewable energy powerhouse.
The Australian steel sector requires significant capital investment over coming years to maintain domestic production capacity. The current additional costs associated with decarbonisation will put significant pressure on the sector, which already faces competition from importers. This support will help to ensure domestic production capacity is maintained while the sector plans for and invests in decarbonisation pathways.
Grant funding of $200.0 million over three years from 2023-24 will be available to support the objectives of the CICEI - PSPS program which are to:
- support and sustain sovereign manufacturing capability during the net zero transformation;
- ensure the continued availability of locally produced primary steel, which is a critical input to the clean energy supply chain;
- support an emissions-intensive, hard-to-abate sector and advance development of new clean energy industries, aligned with Australia's ambition to become a renewable energy powerhouse; and
- reduce the risk of carbon leakage, where production shifts from a country with more ambitious emissions reduction policies to others with less stringent policies.
The intended outcomes of the CICEI - PSPS program are:
- continued domestic production of primary steel, until at least 2030 and beyond;
- increased deployment and commercialisation of low emissions technologies;
- increased ability for the sectors to contribute to decarbonisation and transformation to net zero, and pursue new clean energy and value-adding opportunities, including export opportunities; and
- increased consideration of upstream inputs to support decarbonisation pathways.
To be eligible for the funding, projects must:
- be aimed at contributing to Australia's domestic manufacturing capability including a commitment to maintain domestic production to 2030;
- support (directly or indirectly) the broader Australian economy to achieve emissions reduction targets by 2030 and of net zero by 2050; and
- have at least $20.0 million in eligible expenditure.
Eligible activities are expected to directly relate to the project and may include at least one of the following:
- on-site facility projects that maintain, refurbish, upgrade, or expand existing productive infrastructure (for example blast furnaces, basic oxygen furnace, direct reduced iron plant, or hot strip mill);
- on-site investment in lower emissions intensity technology to support primary steel production (for example converting a blast furnace to run on lower carbon fuel such as hydrogen); or
* supporting upstream facilities in the domestic primary steel production supply chain to produce inputs, aligned with future decarbonisation and green steel pathways (for example, off-site facilities to produce green iron, or off-site facilities to support access to iron ore necessary to support green iron or steel production).
The CICEI - PSPS is open to primary steel producers who are invited to apply. No PRF funding is open to coal or gas facilities that commenced operation or expanded their production after 1 July 2023.
Funding will be delivered as a merit-based, target-competitive grant process. The
CICEI - PSPS program will be administered by the Business Grants Hub and will be compliant with the relevant Commonwealth policy and legislative frameworks including the PGPA Act and the CGRGs.
Grant opportunity guidelines have been developed and are available on GrantConnect (www.grants.gov.au) to govern the operation of the program. The grant round opened for applications on 7 September 2023 and closes on 2 November 2023.
Spending decisions will be made by the Minister for Climate Change and Energy, taking into account the recommendations of a PRF Expert Advisory Panel comprised of departmental SES officers and independent experts drawn from diverse fields including science, industry, finance, engineering and climate change. Applications will be assessed against the eligibility criteria and merit criteria set out in the grant opportunity guidelines. All applications submitted will be assessed by the Business Grants Hub against the eligibility criteria prior to the Expert Panel assessing merit.
Persons who are otherwise affected by decisions or who have complaints about the program will be able to provide feedback to the department. The department will investigate complaints about the program in accordance with its complaints policy and procedures. If a person is not satisfied with the way the department handles the complaint, they may lodge a complaint with the Commonwealth Ombudsman.
Funding decisions made in connection with the CICEI - PSPS program are not considered suitable for independent merits review, as they are decisions relating to the allocation of a finite resource and an allocation made from the PRF would be affected by overturning the original decision. The ARC has recognised that it is justifiable to exclude merits review in relation to decisions of this nature (paragraphs 4.11 to 4.19 of the ARC guide).
In addition, the review and audit process undertaken by the ANAO also provides a mechanism to review Australian Government spending decisions and report any concerns to the Parliament. These requirements and mechanisms help to ensure the proper use of Commonwealth resources and appropriate transparency around decisions relating to making, varying or administering arrangements to spend relevant money.
Further, the right to review under section 75(v) of the Constitution and review under section 39B of the Judiciary Act 1903 may also be available. Persons affected by spending decisions would also have recourse to the Commonwealth Ombudsman where appropriate.
The department undertook extensive stakeholder consultation on the design of the PRF from November 2022 to February 2023. This included online and in-person consultation sessions with industry, investors, state, territory and local governments, unions, and First Nations and regional representatives. Relevant Commonwealth departments were also consulted to ensure the PRF complemented other initiatives. A Consultation Update Paper was released in January 2023, which received 78 written submissions. Stakeholders were supportive of the program and its objectives, with the final design of the programs reflecting stakeholders' feedback. Further detail on this consultation is available at (https://consult.dcceew.gov.au/powering-the-regions-fund).
Administered funding of $1.4 billion for the PRF was included in the 2023-24 Budget under the measure 'Powering the Regions Fund - final design', for a period of nine years commencing in 2022-23. Details are set out in Budget 2023-24, Budget Measures, Budget Paper No. 2 at pages 78-79.
Funding for the CICEI - PSPS program of $200.5 million over four years from 2022-23 will come from Program 1.1: Reduce Australia's greenhouse gas, which is part of Outcome 1. Details are set out in the Portfolio Budget Statements 2023-24, Budget Related Paper No. 1.3, Climate Change, Energy, the Environment and Water Portfolio at page 40.
Noting that it is not a comprehensive statement of relevant Constitutional considerations, the objective of the item references the following powers of the Constitution:
* the external affairs power (section 51(xxix));
* the trade and commerce power (section 51(i)); and
- the Territories power (section 122).
External affairs power
Section 51(xxix) of the Constitution empowers the Parliament to make laws with respect to 'external affairs'. The external affairs power supports legislation implementing Australia's international obligations under treaties to which it is a party.
Australia has obligations relating to the Kyoto Protocol to the United Nations Framework Convention on Climate Change, the Paris Agreement and the United Nations Framework Convention on Climate Change (UNFCCC).
Article 10(b) of the Kyoto Protocol obliges parties to 'formulate, implement, publish and regularly update national and ... regional programmes containing measures to mitigate climate change and measures to facilitate adequate adaptation to climate change'.
Article 4.2 of the Paris Agreement obliges parties to 'pursue domestic mitigation measures with the aim of achieving nationally determined contributions'.
Article 4.1(b) of the UNFCCC obliges parties to 'formulate, implement, publish and regularly update national and regional programmes containing measures to mitigate climate change by addressing ... emissions of greenhouse gases'. Article 4.1(c) obliges parties to 'promote and cooperate in the development of technologies, practices and processes that control, reduce or prevent ... emissions of greenhouse gases'. Article 4.2(a) obliges parties to 'adopt national policies and take corresponding measures on the mitigation of climate change'.
The program will support activities in the primary steel production sector related to facilitating the use of lower carbon processes and practices, investment in domestic productive capacity, infrastructure and technology. In doing so, the program will promote measures to mitigate climate change by addressing emissions in greenhouse gases.
Trade and commerce power
Section 51(i) of the Constitution empowers the Parliament to make laws with respect to 'trade and commerce with other countries, and among the states'.
The program will provide funding to recipients who engage in interstate or international trade or commerce, as part of the Australian Government's commitment to support Australia becoming a renewable energy superpower. The program proposes to support activities in the primary steel production sector related to facilitating the use of lower carbon processes and practices, investment in domestic productive capacity, infrastructure and technology.
Territories power
Section 122 of the Constitution empowers the Parliament to 'make laws for the government of any territory'.
The objectives of the program support industrial decarbonisation and new clean energy developments, and support regional economies and workforces in the transformation towards net zero by 2050. The program is available to a range of applicants, some of which may operate in the Northern Territory, Australian Capital Territory, or other Australian territories.
Commonwealth Numbered Regulations - Explanatory Statements