Step 5: Surrender enough units to satisfy liability in ANREU

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The Clean Energy Act 2011 has been repealed.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.

Five steps to managing carbon price liability 5 steps to participate in the CPM Step 1: Confirm operational control or transfer liability Step 2: Apply for an ANREU account Step 3: Register under the NGER Act Step 4: Report emissions under the NGER Scheme Step 5: Surrender enough units to satisfy any liability in ANREU

How is liability met?

For the 2013-14 compliance year, liable entities need to meet their reporting obligations and acquit their carbon price liability under the Clean Energy Act 2011 and the National Greenhouse and Energy Reporting Act 2007

Liable entities that met a threshold had to report an interim emissions number and surrender an equivalent amount of units to meet this number by 16 June 2014.  This represented approximately 75% of their carbon liability for the full year. 

All liable entities must report their final emissions number for 2013-14 by 31 October 2014.

To meet the final carbon liability for 2013-14, all liable entites must surrender sufficient eligible emissions units to match their emissions number, inclusive of units already surrendered, by 2 February 2015.

Entities that don’t surrender sufficient units by 2 February 2015 will incur a unit shortfall charge.

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What are the deadlines?

To meet your liability you must meet the following deadlines:

Statutory deadline 2013-14 compliance year deadlines Details
15 June 16 June 2014
  • 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 23 June 2014 A unit shortfall charge is payable on the sixth business day after 15 June if sufficient units are not surrendered to meet a provisional liability.
31 October 31 October 2014 Report final emissions numbers
1 February 2 February 2015 Surrender units to cover emissions number to avoid a unit shortfall.
1 February + five business days 9 February 2015 A unit shortfall charge is due and payable on the sixth business day after 1 February if sufficient units are not surrendered to meet a final liability.

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What units are eligible?

Only carbon units and eligible Australian carbon credit units (ACCUs) can be surrendered to meet a liability for 2013-14. There are specific limitations on the number of eligible ACCUs that can be used to acquit your liability. There are two types of ACCUs that are eligible to be used to acquit a liability under the carbon pricing mechanism – ‘Kyoto ACCUs’ and ‘non-Kyoto (eligible) ACCUs’.

International emissions units may not be surrendered to meet a 2013-14 liability.

Refer to the full description of eligible emissions units and restrictions around their use.

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What limitations are there on using Australian carbon credit units?

There are limits on the number of eligible ACCUs that can be used to acquit your liability for the 2013-14 year.

For the final surrender period (deadline 2 February 2015), the limit on ACCUs is calculated as five per cent of your final emissions number minus any ACCUs surrendered in the provisional surrender period (before 16 June 2014). If you did not surrender any ACCUs in the provisional surrender period, the limit is five per cent of your final emissions number.

This is illustrated in the example below, where, the total carbon liability is 100, so there is a limit of 5 ACCUs that can be used to meet the liability.

Scenario name ACCUs surrendered Carbon units surrendered Total units surrendered Carbon units refunded Excess ACCUs restored Shortfall
ACCUs surrendered within the limit, with carbon units, and no surplus 5 95 100 0 0 0

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 provisional or final liabilities.

Following the repeal of the Clean Energy Act 2011, ACCUs surrendered above the limits in the final surrender period for 2013-14 will be restored back into the relevant ANREU account, and taken never to have been surrendered or cancelled. The Clean Energy Regulator cannot refund any excess ACCUs.

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How are units acquired?

Liable entities must have an Australian National Registry of Emissions Units (ANREU) account to be able to surrender units, otherwise a shortfall charge will be payable if insufficient units are surrendered against a carbon liability.

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.

For the 2013-14 year, eligible emissions units may be acquired by:

Note that while the Jobs and Competitiveness Program has been discontinued  from 1 July 2014, free carbon units will continue to be issued beyond that date in relation to the 2013-14 year, including as part of the ‘true-up’ process established by the Clean Energy Legislation (Carbon Tax Repeal) Act 2014 (Repeal Act).  These free units can still be surrendered for 2013-14 carbon price acquittal before 2 February 2015.

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 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 provisional 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 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 2 February 2015.

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What do units cost?

The price for a carbon unit purchased from the Clean Energy Regulator for the 2013-14 financial year is $24.15.

The price per unit for the 2012-13 year was $23.00.

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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. All units are surrendered from your ANREU account.

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What if I surrender too many units?

Surplus surrender of carbon units

If you have surrendered more carbon units than your liability for the provisional surrender deadline of 16 June 2014, the surplus is carried forward as a credit for your final surrender obligations.

If the Clean Energy Regulator assesses that you surrendered more units than your liability and you only surrendered carbon units, the surplus will be refunded at $24.15 per unit as soon as practicable.

In order to provide a refund to entities assessed as being in surplus, the Clean Energy Regulator must have up to date bank account details. If you have not provided bank account details, or your details have recently changed, a bank account details form must be completed and emailed to the Clean Energy Regulator.

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Surplus surrender of Australian carbon credit units

If you surrender eligible ACCUs in excess of the surrender limit, the number of excess eligible ACCUs will be restored back into the relevant ANREU account as soon as practicable after the deadline of 2 February 2015 and taken to never have been surrendered. Note that you must still ensure that sufficient other carbon units are surrendered by 2 February 2015 to avoid a unit shortfall charge.

This is illustrated in the example below, where, the total carbon liability is 100, so there is a limit of 5 ACCUs that can be used to meet the liability.

Scenario name ACCUs surrendered Carbon units surrendered Total units surrendered Carbon units refunded Excess ACCUs restored Shortfall
Excess ACCUs - restore ACCUs but incur shortfall 8 92 100 0 3 3

The Clean Energy Regulator will not provide a refund for any surrendered or excess ACCUs, and no restoration is possible for surrendered ACCUs that are within the eligible ACCU surrender limit.

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Complexities when surrendering both Australian carbon credit units and carbon units

In making an assessment under section 132 of the Clean Energy Act 2011 whether a refund is due for surplus units surrendered, the refund calculation will only take into account the carbon units that have been surrendered. The calculation will not take into account any ACCUs that were surrendered during the year, even if the ACCUs were within the eligible ACCU surrender limit. Any excess ACCUs will be restored after 2 February 2015.

For example, if you surrender 100 carbon units and 8 ACCUs to acquit your carbon liability of 100 units, there would be no refund of units as refunds are based only on carbon units surrendered. However, the excess ACCUs of 3 units would be restored after 2 February 2015.

If you surrender 104 carbon units and 5 ACCUs to acquit your carbon liability of 100 units, there would be a refund for the 4 surplus carbon units. However, no ACCUs would be restored.

This is illustrated in the example below, where, the total carbon liability is 100, so there is a limit of 5 ACCUs that can be used to meet the liability.

Scenario name ACCUs surrendered Carbon units surrendered Total units surrendered Carbon units refunded Excess ACCUs restored Shortfall
Excess ACCUs and surplus carbon units - restore ACCUs, no carbon units refunded 8 100 108 0 3 0
Surplus carbon units – refund only for carbon units, but not for ACCUs 5 104 109 4 0 0

Caution should be taken to avoid a surplus of units if a mix of carbon units and ACCUs are surrendered because you will not get a refund for any ACCUs surrendered.

See the table below for further scenarios that illustrate the complexities of surrendering a surplus of both ACCUs and carbon units.  For all scenarios, the total carbon liability is 100, so there is a limit of 5 ACCUs that can be used to meet the liability.

Scenario name ACCUs surrendered Carbon units surrendered Total units surrendered Carbon units refunded Excess ACCUs restored Shortfall
ACCUs within limit, surplus carbon units - no ACCUs restored, no carbon units refunded 5 98 103 0 0 0
Excess ACCUs - restore ACCUs 8 95 103 0 3 0

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Notices

The Clean Energy Regulator will email the following notices to the primary ANREU account representative as part of the process of liability acquittal:

  • a payment advice will be emailed within one hour 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 emailed 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 emailed within two weeks after the conclusion of the final surrender deadline on 2 February 2015.

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 and unit payments
  • any surplus units which will be refunded or restored 
  • if relevant, any unit shortfall charges

Your ANREU account will display your current unit position statement for the provisional surrender period. This statement will include your interim emissions number, the number of units surrendered, the number of units pending surrender and the projected net unit position.

For the final surrender period the emissions number and the number of units that are surrendered by each entity are published on the LEPID.

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