PreliminaryPages
Chair’s foreword
The Australian Government’s Clean Energy Future Legislation
Package in 2011 included a commitment to establish the Clean Energy Finance
Corporation (CEFC) to facilitate the flow of finance into the clean energy
sector. Following a review by an Expert Panel, chaired by Jillian Broadbent AO,
the Government adopted the recommended design and introduced the Clean Energy
Finance Corporation Bill 2012.
The CEFC’s objective is to overcome capital market barriers
that hinder the financing, commercialisation and deployment of renewable
energy, energy efficiency and low emissions technologies. In short, this market
failure in Australia means that the private sector is not investing in clean
energy technology projects on a scale that is desirable if we are to realise
our potential as an innovator and producer of clean energy. The CEFC is a
mechanism to bring the finance and clean energy sectors closer together.
In establishing the CEFC, the Government is making a
significant investment in Australia’s clean energy future. While the Government
will provide the organisation with a broad mandate, the independent CEFC Board
will be responsible for investing in clean energy projects. All investment
decisions will be made through a commercial filter. Finance will be offered on
the least generous terms; enough to enable a project to enter the commercial
arena, but not to create substantial negative externalities or market
distortions. It is envisaged that there will also be co-investment with the
private sector.
The CEFC will expect to make returns on investments, but in
making its investment decisions will also take into account other positive
community and environment benefits that the private sector would not
necessarily consider. This commercial approach to investment decisions combined
with its consideration of the positive external benefits make the CEFC a key
component of Australia’s clean energy strategy.
The CEFC will complement the carbon price, renewable energy
target and other programs and initiatives to encourage and facilitate
development of the clean energy sector. The CEFC will be part of an innovation
chain, investing in projects and technologies that are at the later stage of
development and are viable commercial prospects. Other programs such as the
Australian Renewable Energy Agency provide grants at the earlier research and
development stage. To give effect to these agency and program relationships as
part of the Clean Energy Future Package, provision is made for the sharing of
appropriate information between the CEFC and relevant agencies.
As part of its inquiry, the committee also looked at the
Clean Energy Legislation Amendment Bill 2012, the Clean Energy (Customs Tariff
Amendment) Bill 2012, and the Clean Energy (Excise Tariff Legislation
Amendment) Bill 2012. Changes in the Clean Energy Legislation Amendment Bill:
support the establishment of the CEFC; give effect to other government
commitments in relation to the coverage of gaseous fuels—liquefied petroleum
gas (LPG), liquefied natural gas (LNG) and compressed natural gas (CNG); and
make other technical amendments to improve the operation of the carbon pricing
mechanism.
In response to calls from the gaseous fuels sector and the
recommendation of the Joint Select Committee on Australia’s Clean Energy Future
Legislation, LPG, LNG and CNG not used for transport purposes will now be
covered by the carbon pricing mechanism rather than the fuel tax system. This
amendment will mean that it will be easier for industry to manage its cash
flow, firms will have more flexibility in managing their carbon liabilities,
and compliance costs will be reduced.
The treatment of LPG and LNG that is not used for transport
purposes will align with the arrangements for liquid fuels under the carbon
pricing mechanism. The changes to the coverage of LPG and LNG will take effect
from 1 July 2013 to allow transitional and compliance arrangements to be
considered, developed and implemented.
Bringing non-transport CNG under the carbon pricing mechanism
will reduce compliance costs for small producers and reduce administrative
costs for Government in relation to excise. If the Bill is passed, the CNG
changes will be able to commence on 1 July 2012 as CNG is produced form a
natural gas that is already subject to an upstream price under the carbon
pricing mechanism. The Excise and Tariff bills also give effect to changes to
the treatment of non-transport CNG, by exempting it from customs and excise
duty.
The Clean Energy Legislation Amendment Bill also contains
provisions to enhance the operation of reporting entities under the National
Greenhouse and Energy Reporting Act by streamlining the nomination of the
person responsible for reporting on the organisation’s carbon emissions. The
Bill also seeks to remove the requirement for regulators to publish ‘total
energy consumption’, and retain the more appropriate ‘net energy consumption’
requirement, as it does not include the transformation of one energy commodity
to another.
The Bill also proposes to enhance the security of the
Australian National Registry of Emissions Units, by providing the regulator
with additional time (from 48 hours to five business days) to make decisions
about giving effect to a transfer instruction and dealing with suspicious
transactions.
This Bill also includes technical amendments to the Carbon
Farming Initiative (CFI) by simplifying the process of finalising methodology
determinations, to provide more time to approve the methodologies of existing
projects and facilitate their transition to the CFI.
I would like to thank the organisations that participated in
the hearing in Canberra. I also thank my colleagues on the committee for their
contribution to the report.
Julie Owens MP
Chair
Terms of reference
On 24 May 2012 the Selection Committee requested the
Committee to inquire into and report on:
n Clean Energy Finance
Corporation Bill 2012;
n Clean Energy
Legislation Amendment Bill 2012;
n Clean Energy (Customs
Tariff Amendment) Bill 2012
n Clean Energy (Excise
Tariff Legislation Amendment) Bill 2012
Under Standing Order 222(e), reports of the Selection
Committee are treated as having been adopted by the House when they are
presented.