Mathias Cormann (WA, Liberal Party, Shadow Parliamentary Secretary for Health Administration) Share this | Hansard source

I, and also on behalf of Senators Cash, Back, Eggleston and Adams, move amendment (2) on sheet 6022:

(2)    Page 214 (after line 3), at the end of Part 8, add:

Division 6—Issue of additional free Australian emissions units in respect of carbon capture and storage

173G  Object of Division

                 The object of this Division is to provide financial incentives for early investment in carbon capture and storage plant and equipment in relation to eligible assets. It does so by providing limited transitional assistance in respect of investment in carbon capture and storage plant and equipment in relation to eligible assets during the period up to and including the financial year 2024–25.

173H  Interpretation

                 In this Division:

carbon capture and compression means the capture, compression and, where necessary, conditioning of emissions, prior the transportation of emissions to a storage site capable of capturing and compressing emissions which are at least:

             (a)    99% pure carbon dioxide; and

             (b)    1.0 barg.

carbon capture and storage project means a project to construct and commission new carbon capture and compression equipment. For this purpose, it is immaterial whether the project has been completed.

carbon capture and storage ready assistance means assistance under this Division.

coal gasification means a manufacturing process that converts coal to a synthesis gas (syngas, which is mainly carbon monoxide and hydrogen), which can be further processed to produce chemicals, fertilizers, liquid fuels, hydrogen, and electricity; coal gasification is not combustion, but rather partial oxidation, meaning limited oxidant is added.

EITE emission units, in respect of a facility, means the number of free Australian emissions units issued to a person in respect of the facility under the provisions of the emissions-intensive trade-exposed assistance program, other than this Division.

173I  Issue of free Australian emissions units in respect of carbon capture and storage

        (1)    The emissions-intensive trade-exposed assistance program must provide for the issue of free Australian emissions units (CCSR units) in respect of a facility that:

             (a)    undertakes emissions-intensive trade-exposed activities; and

             (b)    uses coal gasification technology; and

             (c)    is controlled or operated by persons that have invested, or stand ready to invest, in carbon capture and storage ready plant and equipment.

        (2)    CCSR units must not be issued to a person under this Division unless the person:

             (a)    meets such requirements as are specified in the emissions-intensive trade-exposed assistance program; and

             (b)    has a Registry account.

        (3)    The requirements of this Division are in addition to the requirements of the other Divisions in this Part.

173J  Requirements for assistance

        (1)    The Authority may issue a person with a certificate of eligibility for carbon capture and storage ready assistance if:

             (a)    the person has applied for the issue of free Australian emissions units under the emissions-intensive trade-exposed assistance program; and

             (b)    subsections (2) to (6) apply in respect of that application.

        (2)    The facility (or facilities) to which the application relates uses (or use) coal gasification equipment.

        (3)    In relation to one or more facilities to which an application relates, as at 1 June 2011:

             (a)    carbon capture and compression plant and equipment is installed at the facility; or

             (b)    a carbon capture and storage project is in existence but has not been completed and the project is fully committed by the project proponent, having regard to the following matters:

                   (i)    the project proponent’s rights to land for the construction of the project;

                  (ii)    whether contracts for the supply and construction of the  project’s major plant or equipment (including contract provisions for project cancellations) were executed;

                 (iii)    the status of all planning and construction approvals and licences necessary for the commencement of construction of the project (including completed and approved environmental impact statements);

                 (iv)    the level of commitment to financing arrangements for the project;

                  (v)    whether project construction has commenced;

                 (vi)    whether a firm date had been set for project construction to commence.

        (4)    The applicant has not obtained or cannot reasonably obtain, on reasonable economic terms, an off take arrangement or storage option for the captured, compressed and conditioned carbon during the financial years up to and including 2024–25.

        (5)    The applicant must provide the Authority with a report:

             (a)    setting out the amount or volume of carbon which is reasonably likely to be captured by the carbon capture and compression plant and equipment in each year; and

             (b)    the date of installation of the carbon capture and compression plant and equipment at the facility; and

             (c)    the technical specifications of the carbon capture and compression plant and equipment at the facility; and

             (d)    whether the applicant considers that the carbon capture and compression equipment at the facility meets the requirements of this Division.

        (6)    A report complies with this subsection if:

             (a)    the report is prepared by a person who has appropriate engineering qualifications; and

             (b)    the report sets out the person’s estimate of the carbon capture and storage capability of the plant and equipment of the facility; and

             (c)    the person does not have an interest, pecuniary or otherwise, in the outcome of the application.

173K  Further information

        (1)    The Authority may, by written notice given to an applicant, require the applicant to give the Authority, within the period specified in the notice, further information in connection with the application.

        (2)    If the applicant breaches the requirement, the Authority may, by written notice given to the applicant:

             (a)    refuse to consider the application; or

             (b)    refuse to take any action, or any further action, in relation to the application.

173L Issue of certificate of eligibility for carbon capture and storage ready assistance

Scope

        (1)    This section applies to a facility if:

             (a)    an application for the issue of free Australian emissions units under the emissions-intensive trade-exposed assistance program has been made in respect of the facility; and

             (b)    subsections 173J(2) to (6) apply in respect of that application.

Issue of certificate

        (2)    After considering the application, the Authority may issue a certificate of eligibility for carbon capture and storage ready assistance in respect of the carbon capture and storage project.

        (3)    A certificate of eligibility for carbon capture and storage ready assistance must state that a specified number is the number of units available for issue as CCSR units in respect of the facility, for the purposes of the subsection 173M(3).

Timing

        (4)    The Authority must take all reasonable steps to ensure that a decision is made on the application:

             (a)    if the Authority requires the applicant to give further information under subsection 173K(1) in relation to the application—within 90 days after the applicant gave the Authority the information; or

             (b)    otherwise—within 90 days after the application was made.

Refusal

        (5)    If the Authority decides to refuse to issue a certificate of eligibility for carbon capture and storage ready assistance in respect of the facility, the Authority must give written notice of the decision to the applicant.

Publication of copy of certificate

        (6)    As soon as practicable after issuing a certificate of eligibility for carbon capture and storage ready assistance in respect of the facility, the Authority must publish a copy of the certificate on its website.

173M  Amount of free units to be issued

Scope

        (1)    This section applies to a facility if a certificate of eligibility for carbon capture and storage ready assistance is in force in respect of the facility.

Issue of free units

        (2)    On 1 September in each eligible financial year beginning from 1 July 2011 to 1 July 2024, the Authority must issue CCSR units in respect of the facility in accordance with this section.

        (3)    The number of CCSR units to be issued in respect of a facility in each eligible financial year must be the lesser of:

             (a)    the number of units available; and

             (b)    number of units capable of being allocated;

where:

number of units available is the number of Australia emissions units that represents the carbon dioxide equivalence of the greenhouse gases capable of being captured by the carbon capture and compression pant and equipment installed at the facility.

number of units capable of being allocated is the number of CCSR units which, if added to the EITE emissions units, would cause the total number of free Australian emission units issued to a person in respect of the facility to equal number of units which represents the percentage amount set out for that year in the following table:

This amendment provides for a proposed mechanism which will deliver a consistent approach for providing transitional assistance and financial incentive for liable entities investing in carbon capture plant and equipment prior to the full commercialisation of carbon storage projects in Australia. It does this by confirming the government’s commitment to be a low-emission-energy economy and bringing forward the early development of industrial scale carbon capture and storage projects.

In particular, the amendment will confer the authority to issue a number of free Australian emissions units in respect of certain eligible emissions-intensive trade-exposed activities which employ coal gasification technology and invest in carbon capture and storage ready plant and equipment during the first 14 years of the scheme. The level of assistance will be determined by the amount of direct emissions which are capable of being captured by the installed equipment at the facility and the degree of carbon capture and compression readiness for such equipment. It will impose strict limits on the percentage of free Australian emissions units as a proportion of actual emissions which an applicant is issued with so as to avoid windfall gains; provide that the issue of free Australian emissions units available is pro rata-ed in respect of the degree of readiness of the carbon capture and compression equipment; provide for no double counting under other assistance mechanisms under the CPRS, including other policy commitments; and grant funding under, for example, the carbon capture and storage flagship program application.

Finally, the exemption scheme has been designed to encourage and incentivise forward-looking investment by liable entities to develop an effective global response to climate change. The design also moderates the level of assistance through the imposition of limits on the receipt of free Australian emissions units, which prevents entities receiving a windfall gain. Receipt of other forms of assistance under the CPRS would not preclude a liable entity from assistance under this scheme except to the extent that the percentage limit is reached. I commend the amendment to the Senate.