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13. CIVIC LEGAL ADVICE Carbon Tax - Obstacle or Opportunity Who do you think are the top 500 polluters in Australia Energy producers and mineral extractors - complete with smog and billowing chimney smoke Or your Local Government – providing recreation facilities, waste collection and security Potentially, both are significant emitters and therefore directly subject to pay a price for carbon emissions. Many lament the obstacles facing households and businesses due to a price on carbon. But where there is change, there is opportunity for those who seek it. This article looks at both the heavy smog cloud and the silver lining. The Clean Energy Future Plan In July 2011, the Prime Minister released the ‘Clean Energy Future Plan’. Among other items, as of 1 July 2012 it introduces an initial carbon price of $23 per tonne of carbon dioxide for approximately the top 500 polluters in certain carbon-intensive industries only, being; • Electricity generation; • Energy production, transport, storage and distribution; • Industrial emissions from chemical processes; • Non-private heavy vehicles and business transport; and • Waste disposal and landfill. How is your Local Government affected All Local Governments are indirectly affected. All Local Governments are indirectly affected by the carbon price through the flow on effects of higher energy prices. As businesses pass down the costs to their consumers for goods and services at each level of production, the effect of the carbon price is multiplied. Every time a Local Government powers street lights, builds a recreation facility or even prints a rates notice, the already multiplied cost of energy is factored in. Obviously someone has to pa. So, do councils choose to provide less or should ratepayers pay more This is a question each Local Government must address. Some Local Governments are directly affected. Local Governments that provide landfill and waste disposal services may be directly affected by a carbon price. It has been estimated that of the top 500 polluters, around 190 are in the waste industry. From those 190 polluters, many are Local Governments. Generally, the entity that is liable for emissions is the one that has operational control of the facility. So, if a Local Government has authority and is in charge of a waste facility’s policies including environmental, health, safety and operating standards, then they are deemed to have operational control of it. Whether or not the Local Government will be liable to pay a carbon price depends on whether the facility they control is a ‘significant emitter’. If a facility produces 25,000 tonnes of carbon dioxide per year or more, then they are a significant emitter. Or, if a facility emits more than 10,000 tonnes within a prescribed distance from a large landfill facility, then they will still be a significant emitter (this attempts to stop entities from circumventing their liability by opening many landfill facilities which each produce less than 25,000 tonnes per year but aggregate more than that). A carbon price will not be charged on emissions from waste deposited before 1 July 2012, however these emissions will still be taken into account to calculate which councils fall within the emissions threshold. So, how are emissions measured in the first place Incredibly, they are still figuring this out. As they stand, current methods are considered unreliable. Is there any relief Under the carbon pricing regime, the challenge for many large and even small Local Governments is the significant administrative as well as cost burdens of a carbon price. The Federal Government has offered certain sectors such as private households, small business, and some industries financial assistance to address the impact of a carbon price. For example, the energy industry has negotiated relief in the form of federal government assistance and grants (including the $5.5 billion Energy Security Fund), and households are promised compensation through personal income tax cuts (although it is unclear whether any increase in council rates have been taken into account for the purposes of compensating households). Unfortunately, Local Governments have no relief for direct costs. Clearly, affected Local Governments will have to fend for themselves in these (not muddy, but) warmed waters, and seriously consider the opportunities available to them. Enough of the peril – where is the opportunity Opportunities always exist for those Local Governments who adapt to the new regime and take a holistic approach to their carbon footprint. Some opportunities are: • Regional and remote councils with large amounts of land and large areas may be suitable for farming solar and wind energy generation to sell. This could even be done by utilizing funding from state or federal sources; • Councils can actively generate carbon credits or sell renewable energy certificates through methane capture and alternative electricity generation. • Reducing carbon costs through expanding recycling, substituting out inefficiencies; flaring methane, removing organic matter from landfill and energy efficiency; • Reducing carbon emissions and encourage energy efficiency; and • Increasing innovation and investment in renewable energy. In addition, the Government has also announced an expansion of the Low Carbon Communities Program from $80 million to $330 million. This program provides grants to local councils and communities that show improved energy efficiency in council and community buildings. Note, however, that these grants only appear to be relevant for indirect cost increases. What should Local Governments do now Consider the obstacles and opportunities, including: • How does the carbon price affect direct and indirect costs Also, review any ongoing contracts to determine if and how they are affected by price increases; • Where there are direct costs through shared landfill facilities, consider agreements to properly apportion fair liability to each council; • Can rates and fees be increased to counteract the increased costs, or is it more palatable to your ratepayers to scale down council services • Identify any opportunities relevant to your council and be proactive in taking advantage of them – this is especially important as many councils may be slow off the mark to consider this; • Query whether there are government grants available – these may be less competitive than expected if other councils are slower in recognizing their availability. Alyce Conway-Mortimer. Disclaimer This article is the author’s summarised discussion of the law and is protected by copyright. It must not be reproduced in any form without his express written permission. No responsibility is accepted for any errors, omissions or misstatements in the article which is not intended as legal advice and must not be relied on as such. Readers should take legal advice when considering their own position. westerncouncillor SEPTEMBER 2011
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