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Carbon pricing mechanism

Administration of the carbon pricing mechanism.

The Clean Energy Regulator is progressively implementing two industry assistance schemes associated with the carbon pricing mechanism, in line with legislative requirements.

  • The Energy Security Fund offers assistance to highly emissions-intensive coal-fired generation complexes to secure consistency of electricity supply during the transition to clean energy generation. In 2011–12, the Regulator assessed applications for assistance under the fund. The Regulator's decision was published on the Clean Energy Regulator's website on 6 June 2012.
  • The Jobs and Competitiveness Program is designed to support Australian jobs and production in emissions-intensive trade-exposed industries while ensuring that those industries retain strong incentives to reduce their emissions. The Clean Energy Regulator put in place the necessary arrangements for the program to commence from 1 July 2012.

During the reporting period, the Clean Energy Regulator developed business capabilities to support the effective implementation and administration of the carbon pricing mechanism, such as the Liable Entities Public Information Database.

The Clean Energy Regulator is also developing an effective administrative regime for the mechanisms that are available under the Clean Energy Act 2011 to enable stakeholders to transfer their liability under the carbon pricing mechanism. Forms for liability transfer certificates, joint ventures and obligation transfer numbers were published on the Clean Energy Regulator's website in May and June 2012, following the finalisation of relevant Regulations under the Clean Energy Act 2011 and the National Greenhouse and Energy Reporting Act 2007 on 19 April 2012.

Technical workshops on point of liability functions were held across Australia in May 2012, to help clients to understand and meet their obligations under the carbon pricing mechanism.

Work began on future developments to liability functions, including capabilities related to the surrender and cancellation of obligation transfer numbers and liability transfer certificates, and new capabilities allowing eligible users of certain liquid fuels to ‘opt in’ to the carbon pricing mechanism.

Energy Security Fund

By 2020, the Australian Government's strategy to secure a clean energy future for Australia will see a cut in emissions-intensive electricity generation and an increase in investment in new clean energy sources. Recognising the impact that the transition will have on the electricity generation sector, the Australian Government developed the Energy Security Fund, which provides transitional assistance to emissions-intensive coal-fired generation complexes.

The Clean Energy Regulator is responsible for administering transitional assistance including allocation of free carbon units between 2013 and 2017.

To be eligible for free carbon units, which can be used to offset liabilities under the carbon pricing mechanism, an electricity generation complex must meet certain requirements set out in the Clean Energy Act 2011.

Generators were required to submit applications for assistance in May 2012. The applications were considered by the Regulator and nine generation complexes were assessed as eligible. The details of the successful applicants were announced on 6 June 2012 and published on the Clean Energy Regulator's website.

The nine successful applicants have received certificates of eligibility to receive free carbon units. Free carbon units will only be issued to certificate holders that comply with annual power system reliability requirements and lodge annual clean energy investment plans.

The initial allocation of free carbon units to the coal-fired generation complexes will commence in September 2013 and continue over a four-year period. Each year, a maximum of 41.705 million units will be issued to those eligible generation complexes according to a formula set out in the Act.

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