How is liability met?
To meet your liability under the Clean Energy Act 2011, you can acquire and surrender enough eligible emissions units to meet your liability, or you must pay a unit shortfall charge.
During the fixed price period (2012-13 to 2014-15), you must acquit your full liability before the end of 1 February following the financial year in which the emissions occurred.
If you have one or more interim emissions numbers for a fixed price year, you will also need to acquit a progressive liability equal to the total of your interim emissions numbers before the end of 15 June during that financial year.
Note that as 15 June 2013 and 1 February 2014 fall on weekends, the surrender deadlines for the 2012-13 financial year are 17 June 2013 and 3 February 2014.
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What are the deadlines?
During the fixed price period, to meet your liability you must meet the following deadlines:
||2013-13 eligible financial year deadlines
|15 June (fixed price years only)
||17 June 2013
- Report interim emissions numbers, if you have any.
- Surrender eligible emissions units equal to the total of the interim emissions numbers to avoid a unit shortfall.
|15 June + five business days (fixed price years only)
||24 June 2013
||If you have not surrendered enough units to meet your progressive liability, a unit shortfall charge is due and payable on the sixth business day after 15 June.|
||Report final emissions numbers|
||3 February 2014
||Surrender units to cover emissions number to avoid a unit shortfall.|
|1 February + five business days
||10 February 2014
||If you have not surrendered enough units to meet your final liability, a unit shortfall charge is due and payable on the sixth business day after 1 February.|
During the flexible price period from 1 July 2015, the final surrender date of 1 February in the year following the relevant financial year is the single deadline for meeting 100 per cent of your liability.
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What units are eligible?
For the fixed price period (2012-13 to 2014-15), only carbon units and eligible Australian carbon credit units (ACCUs) can be surrendered to meet a liability. There are specific limitations on the number of eligible ACCUs that can be used to acquit your liability in the fixed price period.
For the flexible price period (beginning 1 July 2015), eligible international emissions units may also be surrendered to meet a liability, subject to specific limitations on their use.
Refer to the full description of eligible emissions units and restrictions around their use.
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What limitations are there on using each type of eligible unit?
Australian Carbon Credit Units
There are limits on the number of eligible Australian carbon credit units (ACCUs) that can be used to acquit your liability in the fixed price period (2012-13 to 2014-15).
For the progressive surrender period (deadline 15 June), the limit on ACCUs is calculated as five per cent of your interim emissions number.
For the final surrender period (deadline 1 February), the limit on ACCUs is calculated as five per cent of your final emissions number minus any ACCUs surrendered in the progressive surrender period. If you did not surrender any ACCUs in the progressive surrender period, the limit is five per cent of your final emissions number.
There is an exception to these limits. If at least 50 per cent of your emissions are from landfill sources, there is no limit on the number of eligible ACCUs you can use to acquit your progressive or final liabilities. Also, there is no limit on the number of ACCUs that can be used to meet your annual unit liability in the flexible price period (from 1 July 2015).
ACCUs surrendered above the limits in the progressive or final surrender period will be carried forward to the next final surrender period. The Clean Energy Regulator cannot refund any excess ACCUs.
You cannot use eligible international emissions units to meet your liability in the fixed price period.
In the flexible price period, the limit on eligible international emissions units is 50 per cent of your liability. A sub-limit within the 50 per cent limit applies to the use of eligible Kyoto units meaning these units can only be used to meet up to 12.5 per cent of your liability.
Refer to the full description of eligible emissions units for further information about the types of eligible international units that may be used to acquit your liability.
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How are units acquired?
If you intend to acquit your liability by acquiring and surrendering eligible emissions units, you must have an Australian National Registry of Emissions Units (ANREU) account.
ANREU account holders who are not liable entities have the option to hold units for trading and transfer but are not expected to surrender units if they have no liability.
In the fixed price period eligible emissions units may be acquired by:
In the flexible price period, carbon units may be purchased from the Clean Energy Regulator through auctions, as well as through the secondary market. ACCUs may also be acquired through the Carbon Farming Initiative and the secondary market.
Eligible international emissions units may be acquired by participating in approved international schemes or may be purchased through secondary markets trading in eligible international emissions units.
Further information is available on Purchasing eligible emissions units in the secondary market and Using Australian Carbon Credit Units to acquit your liability.
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Purchasing carbon units from the Clean Energy Regulator
You can meet part or all of your liability in a fixed price year by purchasing carbon units from the Clean Energy Regulator at a fixed price through your ANREU account. Carbon units purchased from the Clean Energy Regulator are automatically surrendered and cannot be transferred to another party.
The number of units you can purchase is limited to the total of your interim emissions numbers (during the progressive surrender period) or your emissions number (during the final surrender period) for the relevant year less any eligible units previously surrendered in relation to that year before the surrender deadline.
Carbon units are available for purchase from the Clean Energy Regulator in the lead up to the two surrender deadlines in each fixed price year:
- for the progressive surrender deadline, carbon units can be purchased from 1 April until 15 June,
- for the final surrender deadline, carbon units can be purchased after your emissions number has been published on the Liable Entity Public Information Database (LEPID) and displayed in your ANREU account (in early November) through to 1 February of the following year (or where this date falls on a weekend or public holiday, by the following business day).
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What do units cost?
The price for a carbon unit purchased from the Clean Energy Regulator for the 2012/13 financial year is $23.
The price rises to $24.15 each for 2013/14, and $25.40 each for 2014/15.
From 1 July 2015 the price will be flexible (set by the market).
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How long are units valid for?
During the fixed price period, carbon units purchased from the Clean Energy Regulator are automatically surrendered.
Free carbon units issued through an industry assistance scheme (i.e. the Jobs and Competitiveness Program and Coal-Fired Generation Assistance) for a particular fixed price year are only valid for that year . After the final surrender deadline for a particular fixed price year, all remaining free carbon units for that year, i.e. those not already sold back to the Clean Energy Regulator or surrendered by this date, will be cancelled (see s. 115 of the Clean Energy Act 2011).
Carbon units issued for a flexible price year will continue to be valid in future years.
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How are units surrendered?
If you intend to acquit your liability by acquiring and surrendering eligible emissions units you must have an Australian National Registry of Emissions Units (ANREU) account.
Upon receipt of payment, carbon units purchased from the Clean Energy Regulator are issued into your ANREU account and automatically surrendered. To surrender other units, log into your ANREU account and select the units you wish to surrender. Follow the instructions for surrender in the ANREU user guide.
ACCUs and free carbon units obtained through an industry assistance scheme can also be surrendered against your liability. Eligible international emissions units can only be surrendered in the flexible price period. All such units are surrendered from your ANREU account.
Units cannot be reissued once they have been surrendered.
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Can more units be surrendered than required to meet a future liability?
Liable entities are not required to meet future year obligations in earlier compliance years. However, some liable entities may have a business need to manage their liability in future compliance years arising from an activity or series of activities that occur in earlier compliance years. For example, in the landfill sector, as deposits have an emissions profile over a period of time, some landfill entities are passing on the cost to consumers in current prices for future emissions from landfill deposits.
In a fixed price year, a liable entity can surrender more eligible units than required to meet their liability. Any over surrender of ACCUs is carried forward to the next final surrender period. Any over surrender of carbon units is refunded by the Clean Energy Regulator.
In a flexible price year, a liable entity can surrender more eligible units than required to meet their liability. Any over surrender of eligible units is carried forward. It is not possible to nominate which future years that surplus units will be surrendered against. Any surplus is applied against the next flexible price year.
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The Clean Energy Regulator will email the following notices to the primary ANREU account representative as part of the process of liability acquittal:
- an email will be sent to all liable entities after their emissions number is published on the Liable Entity Public Information Database (LEPID) and displayed in their ANREU account,
- a payment advice will be sent within one business day following a request to purchase carbon units; the payment advice is similar to an invoice and includes the details of the transaction, as well as payment information,
- a receipt of payment will be issued within one business day of a payment for carbon units being verified in the Clean Energy Regulator's bank account, and
- a notice of assessment will be issued at the conclusion of each surrender deadline (progressive concluding 15 June and final concluding 1 February).
The notice of assessment will show one of three positions:
- successful acquittal: where the number of eligible units surrendered equals the liability,
- successful acquittal with a surplus: where the number of eligible units surrendered is greater than the liability,
- shortfall: where the number of eligible units surrendered is less than the liability.
The notice of assessment will contain:
- interim (if any) and final emissions numbers
- all unit transactions
- any surplus units which will be carried forward to the next period or refunded (for final periods in fixed price years only)
- if relevant, any unit shortfall charges and late payment penalties
Your ANREU account will display your current unit position statement following the publication of your emissions number. This statement will include your emissions number, the number of units surrendered, the number of units pending surrender and the projected net unit position. A statement of account will no longer be sent following each unit transaction as the information is displayed in ANREU or on other notices.
The emissions number and the number of units that are surrendered by each entity will be published on the LEPID.
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