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20 May 2013

Chloe Munro, Chair

Speech transcript

Good morning. It is my pleasure to speak at this timely event. Commitments in Europe preclude me from joining you in person. I thank the Carbon Market Institute for giving me the opportunity to participate via this pre-recorded message.

The peak of the first progressive surrender cycle is approaching rapidly. My hope for this summit is that it will answer all your remaining questions at a technical level so you are confident of the steps to meet your carbon price obligations by the 17 June deadline. I also hope the summit provides you with information relevant to your strategic business decisions to manage your obligations effectively and take advantage of the opportunities in the emerging carbon market.

As the Regulator, one of our early actions was to publish the Compliance Education and Enforcement Policy to articulate our regulatory stance which emphasises client education as the foundation to ensure clients fully understand their entitlements and obligations under the law. Having given clients every opportunity to comply, we will have clear grounds to pursue any who appear to deliberately contravene the law. I am pleased to say that thus far, our interactions with clients have been very positive. We have benefited from the overwhelmingly constructive approach taken by liable entities and their representatives and I thank you for it. This summit will assist businesses to equip themselves to make an informed decision in meeting the progressive surrender deadline. Any entity who fails to surrender enough eligible emissions units to satisfy its progressive liability by midnight on 17 June 2013 will incur a shortfall charge. The Regulator has no discretion regarding these charges. If you do have remaining questions, please take this opportunity to speak to the Clean Energy Regulator representatives present, and they will assist you.

There are two sides to the carbon market. While this event focusses on the demand side –to acquire and surrender units to acquit carbon price liability – we are equally focussed on the supply side. We have issued over $2billion worth of free units under the Jobs and Competitiveness Program. Recipients are entitled to sell these units back to us at the daily price published on our website. Instead, sellers have generally chosen to put their units into the market, with financial institutions purchasing units for later sale and surrender. We are observing these trades through the Australian National Registry of Emissions Units and it is very satisfying to see the market, and our new systems, working as intended, including the very first surrender of units which occurred before Easter.

Australian Carbon Credit Units are another option for liable entities and the Carbon Farming Initiative is going from strength to strength. The number of accredited projects continues to expand as new methodology determinations become available. We are approaching half a million ACCUs created through CFI, and they are finding a ready market. There is plenty of room for growth in this segment of the carbon market and we are delivering webinars and workshops around the country to further increase participation.

Looking beyond 17 June, we are focussed on delivering the elements required for the full year reports due by 31 October. We will continue to consult clients extensively as we develop our systems and processes to ensure they are working to meet your needs.

Longer term we are looking toward the flexible price period and preparing for our trial auctions later this year. We are making progress to give effect to the one-way link with the European Union ETS. We are sharing experience and expertise not just with established market operators such as in Europe and California, but also with countries such as China who are planning a national emissions trading scheme to follow from the current set of local pilots.

As the operator of the primary market, we have an interest in seeing the secondary market function effectively. The unit trading we have already seen is great early evidence of a secondary market forming. We have good relationships with secondary market participants, building on our experience administering the Renewable Energy Target. We will continue to work closely with everyone to protect the integrity of the units and of the market itself.

Many Australian companies are already recognising that a proactive approach towards reducing emissions and increasing energy efficiency gives them a competitive advantage. A price on carbon and the renewable energy target give an added impetus in this direction. As the Chair of the Clean Energy Regulator, I am proud of our work to support Australia's transition to a low carbon economy through an informed and efficient market for carbon and investment in renewable energy.

I wish you all a valuable and productive time at this summit.