The Renewable Energy Target creates demand for renewable energy by requiring liable entities to surrender an amount of renewable energy certificates in proportion to the electricity they acquire in an assessment year. This is referred to as liability. If a liable entity does not surrender the correct amount of certificates, it may be required to pay a shortfall charge. There are some instances where acquisitions are exempt from liability.
Liable entities are classified as an individual or company who make relevant acquisitions of electricity on a grid which has an installed capacity of 100 megawatts or more. They are usually electricity retailers.
If a liable entity acquires electricity sporadically between assessment years then they may be classified as an intermittent liable entity and will be required to report and surrender certificates for the years that they are liable.
To acquit liability each year, liable entities must surrender an amount of both large-scale generation certificates (LGCs) and small-scale technology certificates (STCs).
Certificate liability is determined by applying percentages (the renewable power percentage for LGCs and the small-scale technology percentage for STCs) to a liable entity’s electricity acquisitions for that year. Liable entities acquit their liability by surrendering the required number of certificates to the Clean Energy Regulator for:
Companies that conduct eligible emissions-intensive trade exposed (EITE) activities are issued with exemption certificates which they can trade with their electricity retailer. This reduces the certificate liability that a liable entity has for an assessment year.
EITE activities are specified in the Renewable Energy (Electricity) Regulations 2001. They include aluminium smelting, zinc smelting, petroleum refining and newsprint manufacturing. A complete list of EITE activities is available on our website.
There are other circumstances that result in exemption from liability, which need to be taken into account by liable entities when reporting their acquisitions and calculating liability. These include:
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The Clean Energy Regulator is a Government body responsible for accelerating carbon abatement for Australia.
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