Jun 2007 - Australian Institute of Energy

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Permit allocation will be based around three categories: free allocation to some generators; free allocation to trade exposed energy-intensive industries, and auctioned permits. Ms Harris explained that the reasoning behind this approach was to try and maintain a degree of fairness for existing emitters whose profitability would be affected. This should help maintain shareholder value, but would only continue for the first few years of the scheme. After this period, all power generators would be required to buy permits. Free permit allocations to trade-exposed industries would be maintained until international trading agreements applied to their competitors. A penalty for non-compliance would be set at a level that caps the cost of the scheme at an acceptable level but also encourages compliance. The penalty would be applied against each tonne of emissions for which a permit had not been surrendered, and the penalty would be identical across jurisdictions. NETT is currently modelling various penalty levels. Another interesting aspect that is likely to be included is ‘offsets’. Offsets would be those activities that could be undertaken by participants to reduce emissions and could be used to meet their obligations. Acceptable offset activities would be aligned with those already underway in other schemes, such as the Joint Implementation (JI) mechanism under the Kyoto Protocol, providing participants with greater flexibility in how they manage their emissions reductions. There were many questions from the audience, mostly related to permit allocation and penalty levels. Readers interested in following up some of these details should go to the NETT website at www.emissionstrading.net.au and the AETF website at www.aetf.net.au. Emissions Trading: Task Force Report Key Conclusions Extract from the Executive Summary. For a copy of the full report see http://www.pmc.gov.au/ emissionstrading/index.cfm Climate change is a global challenge that requires a long-term global solution in order to avoid environmental, social and economic dislocation. Curtailing greenhouse gas emissions will impose a cost both on the global economy and individual nations. Addressing climate change is a risk management issue on a global scale. The goal of reducing emissions needs to be achieved while maintaining international economic growth and development. While a comprehensive global approach to climate change is required, it will be difficult to reach international consensus in the near future. In the short to medium term, international action on climate change is likely to be focused on cooperation between countries at the bilateral, regional and plurilateral levels. Australia already has an emissions cap that is applicable until 2012. On balance, there would be benefits in the Australian Government now setting a post-2012 constraint on emissions. Market-based approaches that deliver a price on carbon will achieve greenhouse gas abatement, commensurate with an emissions target, at least cost. The overriding goal of Australia’s efforts should be to lower emissions at least cost. Of the marketbased instruments, emissions trading should be preferred to a carbon tax. An Australian emissions trading scheme, with a carbon price set by the market, would improve business investment certainty. For Australia to commit to emissions trading now would place us in advance of most of the world community. A workable global emissions trading scheme is likely to evolve slowly through a patchwork of linked national and regional schemes. It is in Australia’s interest to develop a domestic emissions trading scheme that might, over time, be linked to complementary schemes in other countries. Deepening the engagement of developing countries in greenhouse gas abatement will require the development of links between emissions trading and a range of other measures consistent with those countries’ economic growth and energy security objectives. An Australian scheme should be tailored to our own needs. Introduction of an Australian emissions trading scheme will require careful planning and implementation. Australia’s medium term emissions trajectory and its long-term aspirational goal must be set with great care while recognising the need for deeper emissions reductions over time. An Australian emissions trading scheme needs to take account of the trade-exposed nature of many of our emissions-intensive industries. The inclusion of trade-exposed, emissions-intensive industries in an Australian emissions trading scheme must avoid prejudicing their competitiveness but also provide them with appropriate incentives for abatement. The key design features of an Australian emissions trading model should be based on a ‘cap and trade’ model. Flexibility is vital. The operation of the scheme should be reviewed periodically, initially on a five-yearly basis, to allow calibration of the sequence of short-term emissions caps. Policy towards deployment of low-emissions technologies should be technology neutral, allowing the market to choose the least-cost solutions. Emissions trading is not a panacea. An Australian approach to reducing emissions must be national and operated by only one level of government. It will take about four years for Australia to begin full-scale emissions trading. The challenge of addressing climate change through policies of adaptation and mitigation must not be underestimated. It is highly complex. The Task Group believes the key to success is to begin at once, but to proceed with care on the basis of considered and informed decisions. 34 EnErgy nEws Vol 25 no. 2, June 2007
Blake Dawson Waldron Resources and Energy Practice Blake Dawson Waldron (BDW) is one of Australia’s leading law firms with offices in Sydney, Melbourne, Canberra, Perth, Brisbane, Shanghai, Port Moresby and an associated office in Jakarta. It was named Australian Law Firm of the Year in 2006 by Chambers Global. BDW’s resources and energy practice most recently won the 2007 Australasian Legal Business (ALB) Award for Australia’s best energy and resources deal, as well as Australian Deal of the Year (ALB Awards 2006) and Australia’s best energy and resources practice (Australian Law Awards 2005). Companies in the resources and energy sectors represent a substantial part of BDW’s client base and the firm has experience in all the issues that arise in transactions in the mining, oil and gas, and energy sectors. Clients range from comparatively small entities to some of Australia’s largest companies, including BHP Billiton, Alinta and Woodside Petroleum, as well as international organisations. BDW’s lawyers have experience in infrastructure, engineering and construction, insurance, financing, environment and native title law, industrial relations, taxation, administrative law and property. BDW’s mining law specialists regularly assist clients by providing legal advice, undertaking negotiations and preparing documentation on their behalf, including: • application of mining legislation and other relevant legislative and regulatory regimes to proposed and existing mining projects and liaising with relevant government departments and regulatory agencies; • acquisition, management and disposal of mining assets and interests, including due diligence reviews; • financing of mining projects and capital market fund raisings; • agreements with state governments in relation to significant mining projects; • contractual agreements relating to exploration and production of minerals and the development of mining projects, including the development of project infrastructure; • contractual agreements for the transportation, marketing and sale of mineral products; and • grant of tenure and land access. BDW’s oil and gas law specialists have worked on projects in almost every major Australian and Papua New Guinean offshore and onshore petroleum region, including the Gippsland and Otway Basins in offshore Victoria, the Cooper- Eromanga Basin in South Australia/South-West Queensland, the Carnarvon, Bonaparte and Perth Basins in Western Corporate Member Profile Australia, the Papuan Fold Belt, the North-West Shelf, and the Timor Sea. They have also worked on projects involving gas transportation on the Dampier to Bunbury natural gas pipeline, LNG, gas-to-liquids, and coal bed methane. International petroleum-related projects include the Guangdong LNG project (China), Sonatrach LNG Refinery (Algeria) and the Ravva Oil project (India). BDW can provide advice on all aspects of projects for the exploration, production and use of oil and gas including regulatory approvals and issues, construction, subsea production facilities, well services, contracting and procurement, contract management, shared facilities and infrastructure, port services, industrial relations, pipelines, petroleum resource rent tax, FPSOs and floating production facilities, PSLA, operational issues, asset acquisitions and disposals, stamp duty and registration fees on transactions. BDW has extensive experience in the energy industry, acting for a number of generators, transmission operators, distribution operators and retailers Australia-wide, including: • advising on project financing for the acquisition of interests in power stations; • acting on the sale and purchase of power assets, including gas pipelines; • documenting and negotiating hedging contracts and retail sale agreements; • preparing and negotiating energy procurement and operation and management contracts for power projects; • advising on, negotiating and documenting arrangements for the construction and ownership of cogeneration facilities, electricity access, connection and supply; • advising on the regulation of utilities both to regulators and government and to bidders on projects, privatisations and private sales of utilities; • developing access arrangements under the National Access Code; • documenting and negotiating gas transportation and supply agreements; and • advising on retail market price regulation and standard contracts. Members of the national energy team are regularly involved in projects overseas in location as diverse as Mauritania, Armenia, Mongolia, Zimbabwe, Papua New Guinea and Indonesia. The BDW energy team regularly advises the Minerals Council of Australia, the Australian Petroleum Production & Exploration Association Limited and the Queensland Mining Council. Involvement with peak mining and resources industry bodies and with governments in relation to resources legislation places BDW at the forefront of developments in the law. 35 EnErgy nEws Vol 25 no. 2, June 2007
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Jun 2007 - Australian Institute of Energy

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