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Role

 

The role of the Clean Energy Regulator is determined by the provisions of a range of climate change and clean energy legislation. In particular, the Clean Energy Regulator has administrative responsibilities in relation to the:

  • carbon pricing mechanism, under the Clean Energy Act 2011
  • National Greenhouse and Energy Reporting Scheme, under the National Greenhouse and Energy Reporting Act 2007
  • Australian National Registry of Emissions Units, under the Australian National Registry of Emissions Units Act 2011
  • Carbon Farming Initiative, under the Carbon Credits (Carbon Farming Initiative) Act 2011
  • Renewable Energy Target, under the Renewable Energy (Electricity) Act 2000.

Table 2.1 provides a summary of those regulatory schemes.

Carbon pricing mechanism

Australia introduced a price on carbon, commencing on 1 July 2012, to create incentives to encourage Australia's biggest polluters to reduce their emissions and invest in clean energy.

In the first three years the price is fixed, starting at $23 a tonne in 2012-13. From 2015-16, it transitions to a flexible market price under a 'cap and trade' scheme.

In both the fixed and the flexible price periods, liable entities have to report on their emissions and pay a price for every tonne of carbon pollution or equivalent greenhouse gases that they emit. The reporting on emissions is administered through the National Greenhouse and Energy Reporting Scheme.

National Greenhouse and Energy Reporting Scheme

The National Greenhouse and Energy Reporting Scheme is a national framework for the reporting and dissemination of information about the greenhouse gas emissions, greenhouse gas projects, and energy use and production of corporations.

The objectives of the scheme are to:

  • underpin the introduction of an emissions trading scheme
  • inform government policy makers and the Australian public
  • help meet Australia's international reporting obligations
  • assist the programs and activities of the Australian Government and state and territory governments
  • avoid duplication of reporting requirements in the states and territories.

Corporations that meet a reporting threshold must provide specified information for the reporting year, including details of their greenhouse gas emissions, energy production and energy consumption.

Australian National Registry of Emissions Units

The Australian National Registry of Emissions Units is a secure electronic system designed to accurately track the location and ownership of emissions units issued under the Kyoto Protocol of the United Nations Framework Convention on Climate Change, the Carbon Credits (Carbon Farming Initiative) Act 2011 and the Clean Energy Act 2011.

Organisations or individuals that have an emissions liability or wish to hold or transact (transfer, cancel, surrender or relinquish) such units are required to have an Australian National Registry of Emissions Units account.

As well as supporting the effective accounting of Australian carbon credit schemes, the Australian National Registry of Emissions Units ensures that units can be transferred and managed in accordance with the desired business rules and technical requirements of all national registries. It has been developed and tested to ensure compliance with the internationally agreed standards.

Carbon Farming Initiative

The Carbon Farming Initiative is a legislated offsets scheme that allows farmers and land managers to earn carbon credits by storing carbon or reducing greenhouse gas emissions on the land. The credits can be used to offset emissions liabilities or sold in the carbon market. Participation in the Carbon Farming Initiative is voluntary.

Credits generated by Carbon Farming Initiative-approved projects that are recognised for Australia's obligations under the Kyoto Protocol can be sold to companies with liabilities under the carbon pricing mechanism. This includes credits earned from activities such as reforestation, savanna fire management and reductions in emissions from livestock and fertiliser use. The Carbon Farming Initiative Non-Kyoto Carbon Fund will provide incentives for other activities, including revegetation and soil carbon projects.

Renewable Energy Target

The Renewable Energy Target has two elements that create a financial incentive for investment in renewable energy sources through the trading of certificates.

The Large-scale Renewable Energy Target creates a financial incentive for the establishment and growth of renewable energy power stations, such as wind, solar or hydro-electric power stations, by legislating demand for large-scale generation certificates (LGCs). LGCs are created based on the amount of eligible renewable electricity produced by a power station, and can be used to offset emissions liabilities or traded to liable entities. Entities that are liable under the Renewable Energy Target have a legal obligation to acquire LGCs and surrender them to the Clean Energy Regulator on an annual basis.

The Small-scale Renewable Energy Scheme creates a financial incentive for the installation of eligible small-scale renewable energy sources, such as solar water heaters, heat pumps, and small-scale wind, solar or hydro-electric generation systems. It does this by legislating demand for small-scale technology certificates (STCs). STCs are created according to the amount of electricity an installation produces or displaces. Liable entities have a legal requirement to acquire STCs and surrender them on a quarterly basis.

The responsibilities of the Clean Energy Regulator include:

  • providing education on the regulatory schemes for which the Clean Energy Regulator is responsible
  • monitoring, facilitating and enforcing compliance with the regulatory schemes
  • assessing emissions data to determine each emitting entity's liability under the carbon pricing mechanism
  • allocating emissions units, including freely allocated units, fixed price units and auctioned units
  • operating the Australian National Registry of Emissions Units
  • administering the National Greenhouse and Energy Reporting Scheme by requiring reporting on and disseminating company information about greenhouse gas emissions, energy production and energy consumption
  • administering the Carbon Farming Initiative by educating participants, assessing applications and issuing credits
  • registering auditors for the National Greenhouse and Energy Reporting Scheme and the Carbon Farming Initiative
  • administering the Renewable Energy Target by maintaining the registries for large-scale generation and small-scale technology certificates and the clearing house for small-scale technology certificates, and monitoring compliance with the Renewable Energy (Electricity) Act 2000.

The Clean Energy Regulator's monitoring and enforcement powers include powers to conduct independent audits, information gathering and inspections; suspend or revoke permissions; accept enforceable undertakings from a regulated entity; issue infringement notices; or pursue legal action for breaches of civil penalty provisions.

Recognising that engagement, education and support assist regulated entities to comply with their obligations, the Clean Energy Regulator:

  • releases guidelines, factsheets, booklets, brochures, newsletters and calculators
  • conducts workshops and forums that provide opportunities for entities to raise questions and concerns
  • engages with entities during the development of its systems, through user-centred design processes.

The Clean Energy Regulator's responsibilities include functions previously performed by the Office of the Renewable Energy Regulator, the Carbon Farming Initiative Administrator and the Greenhouse and Energy Data Officer.

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