Buy-back of free carbon units

Carbon pricing mechanism repeal

The Clean Energy Act 2011 has been repealed. This abolishes the carbon pricing mechanism from 1 July 2014. Liable entities must still meet their carbon price obligations for the 2013-14 financial year.

Content on the Clean Energy Regulator website will be progressively updated to reflect these changes. More information can be found on the carbon pricing mechanism repeal page.

If you hold free carbon units issued through industry assistance programs during a fixed price year (2012-13 to 2014-15), you can request we cancel the units in exchange for payment of a buy-back amount.

Free carbon units are issued through the Jobs and Competitiveness Program and the Energy Security Fund (assistance to coal-fired generators) to provide assistance to industries that are highly affected by the carbon pricing mechanism.

You can surrender these units to meet your liability under the carbon price, trade them in the carbon market, or you can choose to sell them back to the Regulator for a buy-back amount. However, a liable entity that sells units back to the Regulator will still need to meet their carbon price liability by acquiring and surrendering eligible emissions units by the progressive and final surrender dates (15 June and 1 February each year).

The free carbon units you receive through industry assistance expire on 1 February following the financial year in which they were issued. Carbon units not surrendered or bought back will be cancelled by the Regulator after this date.

Buy-back period

Buy-back is available from 1 September of the financial year the units were issued until 1 February the following financial year. For example, if you hold 2013-14 vintage units, you can sell them back to us until 1 February 2015.

Units issued in (vintage year): Buy-back period:
July 2012 – June 2013 1 September 2012 – 1 February 2014
July 2013 – June 2014 1 September 2013 – 1 February 2015
July 2014 – June 2015 1 September 2014 – 1 February 2016

Free carbon units issued after 2014–15 cannot be sold back to the Regulator.

How to make a request for buy-back

To sell back units to the Regulator you will need to hold free carbon units in an ANREU account.

Before we can process a buy-back request, you must provide your bank account details to us if you have not previously done so. Please complete the bank details form for ANREU account holders.

To initiate a buy-back transaction in your ANREU account select the number of units, review the buy-back amount on the screen then press ‘submit’. A PIN is emailed to your ‘approver’ who can then approve the transaction in ANREU.

You can find step-by-step instructions for making a request for buy-back through ANREU in the Management of emissions units user guide.

Buy-back price

The buy-back price paid for free carbon units is based on the date the Regulator receives your buy-back request.

From 1 September to 14 June of the buy-back period, the price is discounted, based on the Reserve Bank of Australia triple B corporate bond rate and the number of days before 15 June.

On 15 June and for the remainder of the buy-back period, we pay the full fixed price value of the carbon units of that vintage.

The daily discounted buy-back prices in the current month are available on the buy-back price page.

From 15 June 2014, units with a 2013-14 vintage will be bought back at a price of $24.15 per unit.

If the unit was issued in: And you ask the Regulator to buy back the units in: The buy-back price is:
2012—13 1 September 2012 – 14 June 2013 Discounted price: see buy-back price
2012—13 15 June 2013 – 1 February 2014 Fixed price: $23
2013—14 1 September 2013 – 14 June 2014 Discounted price: see buy-back price
2013—14 15 June 2014 – 1 February 2015 Fixed price: $24.15
2014—15 1 September 2014 – 14 June 2015 Discounted price: see buy-back price
2014—15 15 June 2015 – 1 February 2016 Fixed price: $25.40

When you sell back your free carbon units, the Regulator will cancel the units and remove them from your ANREU account. We will pay the total buy-back amount into your designated bank account within five working days of receiving your nominated bank details.

How the total buy-back amount is calculated

From 15 June of a vintage year to 1 February the following year, the buy-back amount equals the number of units multiplied by the fixed price per unit for that vintage.

From 1 September to 14 June of the buy-back period, the buy-back amount is based on a discount price of the full fixed price, the Reserve Bank of Australia triple B corporate bond rate and the number of days before 15 June.

The buy-back amount is calculated using the following formula:

Buy-back amount = number of units x fixed charge x (1/(1+r)n/365)

where:

r is the per annum yield (expressed as a percentage) for BBB rated corporate bonds with one to five years maturity, as published by the Reserve Bank of Australia, that is applicable on the day that the request to the Regulator was received.

n is the number of days before 15 June in the fixed charge year that the request to the Regulator was received. From 15 June the factor is 1.

Fixed charge means the per unit charge applicable under the Clean Energy Act 2011 for the issue of a carbon unit with a vintage year of that fixed charge year.

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