Senator Wong: The Minister for Climate Change and Energy Efficiency has provided the following answer to the honourable senator's question: (1) Yes, the Department received legal advice on this issue on 21 September 2011. The advice was requested on 16 September 2011. Legal advice is subject to legal professional privilege. (2) The purpose of clause 103 of the Clean Energy Bill 2011 (the Bill), together with a range of other provisions in the legislation, is to ensure that the legal status of carbon units which have not been surrendered is clear. Transparent and certain property rights are fundamental for any efficient and well functioning market. Carbon units will be created by statute and would have no existence apart from statute. The statute determines the legal nature of the units. Without express provision in the statute, there would be uncertainty about the nature of units. There has been uncertainty in the past about the treatment of emissions units in the European Union and Kyoto trading schemes. The legislation avoids uncertainty about these issues. Clause 103 would clarify that carbon units are a form of property. They would therefore have the characteristics of property in Australian law, subject to contrary statutory provision. They could, for instance, be traded, offered as security, trust property, taxed as property, the subject of family law proceedings or vested in a trustee in bankruptcy. If clause 103 was omitted from the Bill, there would be uncertainty about these matters. The purpose of clause 103 is not to bind a future parliament by attracting s51(xxxi) of the Constitution (relating to acquisition of property on just terms) to the repeal of the legislation. Whether or not carbon units are property for the purposes of s51(xxxi) is not conclusively determined by declaring in the legislation that the units are personal property. The courts have found that permits created under other regulatory schemes can be property for this purpose, even if the underpinning legislation did not state this explicitly. If clause 103 was omitted from the Bill, this would not ensure that repeal of the legislation did not acquire property contrary to s51(xxxi). (3) Yes, see answer to part (1) above. (4) The Department has not carried out any quantification of liabilities that might arise as a result of repeal of the legislation. (5) Whether any liability exists would depend on the nature of the particular unit and the precise circumstances in which any repeal took place. (6) The actual number of units issued in the first 10 years of the mechanism will depend on reported emissions in the fixed price years and the pollution cap in the flexible price years. Accurate estimates of the number of units will therefore depend on future decisions by liable parties and also by the Government when it sets the pollution caps. (7) The Clean Energy Regulator (the Regulator) will issue carbon units in a given flexible charge year under four different circumstances: (a) As a result of an auction conducted by the Regulator. The timing of auctions will be determined by legislative instrument (Part 4; Section 113 of the Clean Energy Bill 2011). The Government has announced that there will be advance auctions of flexible price permits in the fixed price period. (b) In accordance with the Price Ceiling. In the first three years of the flexible price period, if the carbon price increases above a fixed price ceiling set in regulations, participants will be able to buy carbon units from the Regulator at that fixed price. (c) In accordance with the Jobs and Competitiveness Program. Free carbon units under the Jobs and Competitiveness Program will likely be issued early in the financial year. Applications for free carbon units can be made from 1 July to 31 October of the relevant flexible charge year with an extension to 31 December in extenuating circumstances. The Regulator will assess and process applications as soon as possible with maximum assessment times specified (exposure draft of the Clean Energy Regulations 2011). (d) In accordance with Part 8 of the Clean Energy Bill 2011 (coal-fired electricity generation) The Regulator will issue free carbon units on 1 September 2015 and 1 September 2016 (Part 8; Section 161 of the Bill). (8) Yes, see answer to part (1) above. (9) Under clause 100(7)(a), a fixed charge carbon unit is taken to be surrendered as soon as it is issued. The purpose of the automatic cancellation is to prevent trading and banking of purchased units, which is unnecessary in the fixed charge years. Carbon units that are surrendered automatically are cancelled and the entry for the unit is removed from the Registry account in which it is entered, under clause 122(10). Removal from the Registry account upon surrender applies to all carbon units, regardless of whether they are fixed charge units, free units issued in a fixed or flexible charge year, or auctioned units. A person who surrenders a unit ceases to be the legal owner of the unit when the entry for the unit is removed from the person's Registry account. (10) There were approximately 34.4 million excess Renewable Energy Certificates (RECs) after the surrender period of 14 February 2011. The Government has made clear that declining system costs, the high Australian dollar and state and territory feed-in tariffs accelerated solar photovoltaic (PV) deployment since the modelling released in May 2010 has lead the Government to bring forward the phase-out of the solar credits multiplier. (11) In 2010, the concept of small-scale technology certificates did not exist but 25.29 million RECs were validly created in relation to the installation of small generation units and solar water heaters. As at 4 December 2011, 48.99 million Small-scale Technology Certificates (STCs) have been validly created from the installation of small generation units and solar water heaters. (12) In December 2010, to ensure that households continue to contribute to the cost of installing solar systems and to ease pressure on electricity prices, the Government announced changes to the Solar Credits multiplier to bring the scheduled phase-out forward by one year to 30 June 2014. Since that time, strong demand for solar panels has continued, fuelled by declining system costs, the strong Australian dollar and economy, as well as incentives such as Solar Credits and state and territory feed-in tariff schemes. In response to this demand, and to help place the industry on a more sustainable development path, the Government announced on 5 May 2011 that it would bring forward the phase-out of the Solar Credits multiplier by a further year from 1 July 2011. The most recent adjustment to the Solar Credits multiplier will help reduce the oversupply of STCs, which has suppressed the spot price for STCs. Any excess STCs created this year will be added to the 2012 Small-scale Renewable Energy Scheme (SRES) liability, consistent with the requirements of the Renewable Energy Target (RET) legislation. The changes to Solar Credits will continue support to households, businesses and communities for the upfront cost of installing solar panels, while helping to moderate market demand and the impact on electricity prices, and placing the industry on a more sustainable development path. (13) The Office of the Renewable Energy Regulator (ORER) does not provide estimates for large scale certificate creation. Due to recent legislative changes and after having received independent data, the ORER has revised the 2012–13 non-binding Small-scale Technology Percentages (STP). The non-binding STP published on 29 July 2011 under section 40B of the Renewable Energy (Electricity) Act 2000 for: 2012 is 20.87 per cent (equivalent to 38.5* million STCs as a proportion of total estimated liable electricity for the 2012 year); and 2013 is 6.25 percent (equivalent to 12.1 million STCs as a proportion of total estimated liable electricity for the 2013 year) * Includes an estimate of 20.1 million excess STCs to be created in 2011, over the 28 million estimate used in setting the legislated 2011 STP in December 2010. Also includes an updated estimated total of 18.4 million STCs to be created in 2012. (14) For the Small-scale Renewable Energy Scheme component of the RET, any over or under estimation in the 2011 STP is included in the 2012 STP, as shown in the 2012 non-binding target in part (13). (15) From December 2007 to June 2011, a total of $997 million has been provided for solar power installations under the Solar Homes and Communities Plan. (16) (a) Indicative annual greenhouse gas savings attributable to solar and heat pump water heater systems are listed in table 1 below. Table 1 Installation year Annual savings from installations since 2001 in tonnes of carbon dioxide equivalent (CO2-e) 2001 21,603 2002 74,282 2003 145,051 2004 226,579 2005 326,657 2006 428,772 2007 580,925 2008 905,123 2009 1,694,728 2010 2,111,481 2011 to (mid-September) 2,274,054 These estimates are derived from the number of certificates issued under the RET scheme for solar and heat pump water heaters installed each year since 2001 as reported by the ORER. One RET scheme certificate is taken to be equivalent to 1 megawatt-hour (MWh) of avoided fossil based electricity. For each year, a national average emission factor, in tonnes of CO2-e per MWh of electricity displaced (based on Australia's emissions projections 2010, Department of Climate Change and Energy Efficiency, Feb 2011) has been used (see Table 2 below). Table 2 2001 - 2009 2010 2011 Emission factor in tonnes of CO2-e per MWh 1.003 0.986 0.939 (b) The indicative annual greenhouse gas savings attributable to rooftop solar PV systems are set out in Table 3 below. Table 3 Installation Year Annual savings from installations since 2001 in Tonnes of CO2-e 2001 1,826 2002 6,567 2003 9,211 2004 11,033 2005 13,667 2006 16,227 2007 24,096 2008 51,884 2009 168,985 2010 691,786 2011 to (mid-September) 1,368,770 These estimates are derived from the number of rooftop solar (PV) installations creating certificates under the RET scheme or receiving rebates under the Solar Homes and Communities Plan each year since 2001. The conversion from system capacity to annual zero emissions energy generated utilised the RET zone ratings as shown in Schedule 5 of the Renewable Energy (Electricity) Regulations 2001. It was assumed that all solar panels were in Zone 3 as this is where the majority are likely to have been installed. The emission factors used are the same as those listed in part 16(a) above. These factors may be higher than actual, as the higher proportion of gas-fired generation during the day means that emissions intensity of electricity tends to be lower at these times, when electricity from solar PV is produced. As of September 2011, the total installed capacity of wind farms around Australia that are accredited under the RET scheme since 2001 is around 2,550 MW. The Government estimates that the RET, in combination with a carbon price, is anticipated to drive in the order of 6,500 MW of additional wind power capacity by 2020. (17) Regulations to strengthen compliance in relation to Small Generation Units (SGUs) were enacted in November 2010. Before certificates can be created for solar PV systems these amendments require systems to be installed to meet: state, territory and local goverment requirements; Australia Standards, by a Clean Energy Council (CEC) designer/installer; the requirements of the CEC code of conduct. The solar PV system must also be installed by a licensed electrician in that state or territory jurisdiction. The ORER began inspecting SGUs in May 2011. (18) The ORER does not collect data on these issues. Consumer matters such as non-payment for certificates would typically be directed to state and territory Fair Trading Offices.