On 7 December 2011 Acts to establish the Carbon Farming Initiative scheme received royal asset. The package of legislation includes the Australian National Registry of Emissions Units Act 2011, the Carbon Credits (Carbon Farming Initiative) Act 2011, and the Carbon Credits (Consequential Amendments) Act 2011.
The legislation allows for tradeable 'credits' in relation to Australian carbon credit units and eligible international emissions units from Australian land-based actions that reduce or store carbon pollution provided they meet requirements under the relevant Act.
The Clean Energy (Consequential Amendments) Act 2011 provides for the regulation of carbon units issued under the Clean Energy Act 2011. All three classes of units will be regulated under the financial products regime established by the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001. The proposed amendments to the Corporations Regulations 2001 will modify this regime to address the unique characteristics of these units, and avoiding unnecessary compliance costs. The proposed amendment regulations are based on previous draft regulations released for public consultation in November 2011, but now also cover carbon units.
The Clean Energy Act 2011 specifies that the Clean Energy Regulator may issue carbon units through auctions. Section 113 provides that the policies, procedures and rules that apply in relation to the auctioning of carbon units will be determined by the Minister in a legislative instrument. Section 113 outlines a number of broad and unrestrictive auction policies, procedures and rules that can be addressed in the legislative instrument including, among a range of things, auction frequency and size, advance auction of future vintages, auction type, participation, proxy bidding and public information for auctions.
In accordance with its commitment under the Clean Energy Future plan, the Government will finalise the detailed auction design, following consultation with stakeholders, in the first half of 2012.
On 3 February 2012, the Department of Climate Change and Energy Efficiency released a position paper that discusses a number of detailed design proposals for the auctioning of carbon units to be included in the legislative instrument, with the scope of the features considered outlined in the Act. Stakeholder submissions on the proposals for auction design will be taken into consideration when developing the legislative instrument for auctioning carbon units.
Following consultation on auctions through the position paper, stakeholders will also be given the opportunity, in mid-2012, to comment on an exposure draft of the auction legislative instrument. The legislative instrument will guide the implementation of the auction platform.
The consultation draft of the regulations therefore do not cover this issue.