The Clean Energy Regulator has been approached regarding our position on carried forward shortfall (up to 10 per cent) and paid shortfall (over 10 per cent). Our market update stated that the use of these mechanisms is a commercial matter for liable entities to arbitrage surrender over a number of years.
Given that the Renewable Energy Target will be exceeded, the Clean Energy Regulator has no objections to the use of shortfall in the expectation that clients would true up these positions with large-scale generation certificates (LGCs) in a subsequent year, as allowed for under the law.
Renewable Energy (Electricity) Act 2000 has provisions that allow liable entities that do not fully meet their surrender obligations to go into shortfall.
The two options to utilise shortfall are outlined below.
A liable entity may carry forward a shortfall up to (but not including) 10 per cent of its required LGC surrender amount for a particular year.
This amount is added to their surrender liability for the following year. Carried forward shortfalls can accumulate over multiple assessment years, but cannot exceed more than 10 per cent of their total liability.
For further information, see carrying forward LGC shortfalls.
Liable entities with a LGC shortfall of more than 10 per cent of their liability for a year incur a shortfall charge of $65 per certificate not surrendered.
These entities can subsequently surrender additional certificates and obtain a refund of the shortfall charges previously paid, less an administrative fee.
Around $238 million, or the equivalent of 3.66 million certificates, of shortfall charges generated in 2016 and 2017 is in
consolidated revenue, which may be redeemed by the liable entities within three years.
Refunds may only be claimed:
For example, if, in the 2018 calendar year, a liable entity plans to claim a refund on its 2016 shortfall charge, it could only do so if it fully met its 2017 liability through the surrender of LGCs.
Shortfall charges must be paid on time. Unpaid shortfall charges attract interest charges and are managed in accordance with the Clean Energy Regulator’s debt recovery policies and procedures.
For further information, see refunds of shortfall charges.
If you have any questions, please contact the RET Liability and EITEs section on 1300 553 542 or
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