Commonwealth Numbered Regulations - Explanatory Statements

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RENEWABLE ENERGY (ELECTRICITY) AMENDMENT REGULATION 2012 (NO. 1) (SLI NO 13 OF 2012)

EXPLANATORY STATEMENT

Select Legislative Instrument 2012 No. 13

Issued by the Authority of the Minister for Climate Change and Energy Efficiency

Renewable Energy (Electricity) Act 2000

Renewable Energy (Electricity) Amendment Regulation 2012 (No. 1)

The Renewable Energy (Electricity) Act 2000 (the Act) establishes a Renewable Energy Target (RET) scheme to encourage additional electricity generation from eligible energy sources. The RET scheme is designed to ensure that 20 per cent of Australia's electricity supply is generated from renewable sources by 2020.

Section 161 of the Act provides, in part, that the Governor-General may make regulations prescribing matters required or permitted by the Act, or necessary or convenient to be prescribed for carrying out or giving effect to the Act.

Under the Act, wholesale purchasers of electricity ('liable parties') must meet a share of the RET in proportion to their share of the national wholesale electricity market. The Act provides for the creation of Renewable Energy Certificates (RECs) by generators of renewable energy. One REC generally represents one megawatt-hour (MWh) of electricity from eligible energy sources. Assistance is provided under the Act in the form of partial exemption certificates for electricity used in activities that are considered to be emissions-intensive and trade-exposed (EITE).

The Regulation amends the Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations) to support the provisions of the Act that deal with the provision of partial exemptions from liability in respect of the electricity acquired for use in carrying on EITE activities for the purposes of the Act. Examples of activities already defined include the production of silicon, aluminium smelting, and printing and writing paper manufacturing.

The Regulation prescribes additional EITE activities that are eligible under the Act. The Regulation also makes minor technical amendments to the Principal Regulations to support these activities and the assistance arrangements under the RET scheme.

A separate Regulation under section 145 of the Clean Energy Act 2011 formulates the details of the Jobs and Competitiveness Program for the annual issue of free carbon units in relation to EITE activities that have been prescribed for the purpose of that Program.

A Human Rights Statement in respect of the Regulation is included at Attachment A.

Details of the Regulation are set out in Attachment B.

The Act specifies no conditions that must be satisfied before the power to make the Regulation may be exercised.

The Regulation is a legislative instrument for the purposes of the Legislative Instruments Act 2003.

The Regulation commences on the day after it is registered on the Federal Register of Legislative Instruments.

Consultation

The Renewable Energy (Electricity) Amendment Regulation 2012 reflects the outcomes of comprehensive consultation by the Department with the public and stakeholders in assessing activities for eligibility as EITE activities primarily under the Jobs and Competitiveness Program. The eligibility requirements are the same for EITE activities under the RET scheme.

The Department commenced a formal process for defining and determining the eligibility of EITE activities in February 2009 and has involved stakeholder workshops to assist in the creation of appropriate definitions and boundaries for activities. The process also involved the approval of activity definitions by the Minister for Climate Change and Energy Efficiency for the purposes of data collection and publication on the Department's website. Audited data has been submitted to the Government on the basis of the approved activity definitions. Relevant industries that submitted data to the Government for the formal assessment of respective activities were consulted in regard to the wording of the definitions to be included in the Regulations to ensure that the structure of the definitions generally reflects the conduct of the activities generally.

The policy framework for determining the eligibility of EITE activities for assistance under the Program was originally developed in 2009 and has been used to establish the eligibility of activities defined to date under the Renewable Energy Target (RET) scheme under the Renewable Energy (Electricity) Act 2000. The process for assessing activities and defining the technical aspects of the activities, including setting assistance rates and allocative baselines, is outlined in the paper titled Establishing the eligibility of activities under the Jobs and Competitiveness Program (which is available on the Department's website). The paper has been updated over time and should be read in conjunction with this statement and the regulations.

Authority: Section 161 of the Renewable Energy (Electricity) Act 2000

 


 

Attachment A

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Renewable Energy (Electricity) Amendment Regulation 2012 (No. 1)

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

 

Overview of the Renewable Energy (Electricity) Amendment Regulation 2012 (No. 1)

The Regulation amends the existing Renewable Energy (Electricity) Regulations 2001. The Renewable Energy (Electricity) Regulations 2001 provide an administrative framework to implement aspects of the Renewable Energy (Electricity) Act 2000 (the Act) to establish the Renewable Energy Target (RET) scheme, including in relation to power station accreditation, eligibility requirements for renewable energy sources, eligibility requirements for solar water heaters and small generation units, the calculation methods for determining the number of certificates and establish the eligibility of activities for partial exemption certificates.

The Renewable Energy (Electricity) Amendment Regulation 2012 (No. 1) primarily prescribes additional activities that are emissions-intensive trade-exposed activities for the purpose of eligibility for partial exemptions from liability under the RET scheme.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

 

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

 

Greg Combet

Minister for Climate Change and Energy Efficiency

 

 


Attachment B

Details of the proposed Renewable Energy (Electricity) Amendment Regulation 2012 (No. 1)

Regulation 1 - Name of Regulation

Regulation 1 provides that the title of the Regulation is the Renewable Energy (Electricity) Amendment Regulation 2012 (No. 1)

Regulation 2 - Commencement

Regulation 2 provides for the Regulation to commence on the day after it is registered on the Federal Register of Legislative Instruments.

Regulation 3 - Amendment of Renewable Energy (Electricity) Regulations 2001

Regulation 3 provides that the Renewable Energy (Electricity) Regulations 2001 (the Principal Regulations) are amended as set out in Schedule 1.

Schedule 1 - Amendments

Item [1] - subregulation 3(1)

Subregulation 3(1) of the Principal Regulations is amended to refer to the Jobs and Competitiveness Program established by the Clean Energy Act 2011.

Item [2] - subregulation 22A(1)

A new definition of 'coke oven coke' in subregulation 22A(1) replaces the reference to the definition in the National Greenhouse and Energy Reporting Regulations 2008.

Item [3] - subregulation 22A(1)

Subregulation 22A(1) also includes a definition of iron ore to clarify that iron ore includes magnetite ore that has been concentrated and that may be in slurry form, or hematite ore that has been crushed to varying extents. Iron ore does not include any form of iron ore product that has been semi-processed into iron ore balls or exposed to a hardening process by the application of heat and pressure.

Item [4] - regulation 22D, notes 1 to 3

The notes to regulation 22D are amended to clarify that, in addition to prescribing the activities that are eligible EITE activities, Schedule 6 provides information on how assistance is to be calculated.

Item [5] - paragraph 22P(3)(a)

Paragraph 22P(3)(a) is amended to clarify that an audit report that has been prepared for the purpose of the Jobs and Competitiveness Program may be used for an application in these circumstances.

Item [6] - regulation 22W

Regulation 22W is amended to clarify that the time for lodging an application refers to the point in time at which an application is lodged with the Regulator.

Item [7] - subregulation 22X(1)

This item makes a minor typographical amendment to subregulation 22X(1) which provides that applications for a year after 2010 must be made by 31 March.

Item [8] - subregulation 22X(1)

Subregulation 22X(1) is amended to provide that applications for the 2012 calendar year only in respect of a new activity to be prescribed in the Regulation under Parts 33 to 39 of Schedule 6 may be made up until 30 April 2012. This is intended to provide extra time to applicants that are undertaking newly prescribed activities to prepare the application and meet audit requirements. If additional activities are assessed as eligible and are included in the regulation before 30 April 2012, it is intended that the extension in the application date would also apply, where this is practicable having regard to the timing of the regulation and the application.

Applications in respect of EITE activities that have been prescribed in the regulations before 2012 will need to be lodged by 31 March 2012. In subsequent years, applications concerning all EITE activities would need to be lodged before 31 March in the year to which the application relates.

Item [9] - subregulation 22X(1), (2) and (3)

Subregulations 22X (1), (2) and (3) are amended to clarify that the time of lodging an application is the point in time at which an application is lodged with the Regulator.

Item [10] - paragraph 22ZC(4)(a)

Paragraph 22ZC4(a) is amended to clarify that the Regulator must have regard to any further information concerning an amount or volume previously provided to the Department of Climate Change and Energy Efficiency for the assessment of whether the activity should be an EITE activity, including for determining the electricity baseline for each relevant product of the activity.

Item [11] - paragraphs 22ZC(4)(b) and (c)

Paragraphs 22ZC(4)(b) and (c) are be amended to change references to the 'emissions-intensive, trade-exposed assistance program' to the Jobs and Competitiveness Program.

Item [12] - Paragraph 22ZC(4)(b)

Paragraph 22ZC(4)(b) is amended to change references to 'Australian emissions units' to 'carbon units'.

Item [13] - Schedule 6, subclause 655(1)

This item amends subclause 655(1) in Schedule 6 of the Principal Regulations to change the electricity baseline that applies to the tissue paper manufacturing EITE activity from 1.70 to 1.67 megawatt-hours per total tonne of rolls of uncoated tissue paper that meets the specifications outlined in subclause 655.

Item [14] - Schedule 6, paragraph 686(2)(a)

This item amends paragraph 686(2)(a) in Schedule 6 of the Principal Regulations to remove some specific wording in relation to the description of concentrated mineralised copper compounds.

Item [15] - Schedule 6, paragraph 686(2)(b)

This item amends paragraph 686(2)(b) in Schedule 6 of the Principal Regulations to remove some specific wording in relation to the description of concentrated mineralised copper compounds.

Item [16] - Schedule 6, after clause 694

New parts are included in Schedule 6 of the Principal Regulations to add new EITE activities eligible for assistance under the Renewable Energy Target (RET) scheme:

-          Part 33 (Production of ammonia)

-          Part 34 (Production of ammonium nitrate)

-          Part 35 (Production of chlorine gas and sodium hydroxide (caustic soda) solution)

-          Part 36 (Production of fused zirconia)

-          Part 37 (Production of iron ore pellets)

-          Part 38 (Production of liquefied natural gas)

-          Part 39 (Production of magnetite concentrate)

Each part sets out a description of the EITE activity, the classification of the activity for the purpose of providing assistance at the highly or moderately emissions-intensive rate and the electricity baseline for each relevant product produced by undertaking each activity for the purpose of calculating a partial exemption.

For all EITE activities, the assessment of eligibility was based on the operations of the activity in the baseline period July 2004 to December 2008. This is referred to as the period used to assess the eligibility of the activity in the descriptions of the activity outlined below.

Part 33 - Production of ammonia

Division 1 - Production of ammonia

Clause 695 - Production of ammonia

Clause 695 provides that the production of ammonia is the chemical transformation of hydrocarbons (or other hydrogen feedstock) to hydrogen (H2) that is subsequently reacted with nitrogen (N2), to produce anhydrous ammonia (NH3) which has a concentration of ammonia (NH3) by mass that is equal to or greater than 98 per cent.

The activity as conducted during the period used to assess the eligibility of the activity involved catalytic steam reforming of natural gas to produce hydrogen. This was then reacted with nitrogen (the Haber process) and liquefied to produce anhydrous ammonia (NH3) where the concentration of ammonia (NH3) is equal to or greater than 98 per cent with respect to mass. It is intended that the using an alternative hydrogen feedstock to produce ammonia would be considered to fit within the activity description.

The activity description is not satisfied through the undertaking of an activity which produces synthesis gas or hydrogen as the final product. The activity is also not considered to be conducted where the ammonia produced is not anhydrous and/or does not have a concentration of ammonia (NH3) that is equal to or greater than 98 per cent with respect to mass.

The inputs of the activity have been defined to include any hydrogen feedstock including hydrocarbons, water and any other source of hydrogen. Nitrogen is also defined as an input to the activity and this may be either as a refined product or as air.

The activity does not include either the upstream production of the hydrogen feedstock (such as natural gas extraction and distribution or synthesis gas production) or the downstream processing of the ammonia into ammonium nitrate, urea or any other product. As such, for the purpose of an application for assistance, the site undertaking the activity is that where the ammonia as defined is actually produced and does not extend to separate sites which may conduct feedstock preparation and processing or the production of downstream products.

Division 2 - Classification of activity

Clause 696 - Classification of activity

Clause 696 provides that the production of ammonia is an EITE activity eligible for assistance at the highly emissions-intensive rate.

Division 3 - Electricity baseline for calculating partial exemption

Clause 697 - Electricity baseline for product

Clause 697provides that the electricity baseline for calculating the amount of a liable entity's partial exemption for the production of ammonia is 0.224 megawatt-hours (MWh) per tonne of 100 per cent equivalent anhydrous ammonia (NH3) where the concentration of ammonia (NH3) is equal to or greater than 98 per cent with respect to mass, and where the product is produced by carrying out the activity (as described in clause 695) and is of saleable quality (as defined in Regulation 22C).

Part 34 - Production of ammonium nitrate

Division 1 - Production of ammonium nitrate

Clause 698 - Production of ammonium nitrate

Clause 698 provides that the production of ammonium nitrate is the chemical transformation of anhydrous ammonia (NH3) to ammonium nitrate solution (NH4NO3(aq)) which has a concentration of ammonium nitrate (NH4NO3) by mass of 60 per cent or more.

The activity as conducted during the period used to assess the eligibility of the activity involved the catalytic oxidisation of ammonia to create nitric acid in both medium and high pressure plants through the Ostwald process. The nitric acid was then reacted with ammonia to produce ammonium nitrate solution where the concentration of ammonium nitrate (NH4NO3) is equal to or greater than 60 per cent with respect to mass. In the eligibility period, these solutions were further processed to solutions with higher concentrations of ammonium nitrate, blended solution products or solid products (in a granulated, prilled or other form). However, this further processing was assessed as outside the activity boundary.

It is intended that alternative processes of low pressure catalytic oxidation or the Odda process (where nitric acid is reacted with phosphate rock) to produce ammonium nitrate solutions are considered to fit within the activity description.

The inputs of the activity have been defined to include anhydrous ammonia. The activity description is not satisfied through the undertaking of the manufacture of nitric acid (whether low or high purity) alone. It is also not satisfied where the ammonium nitrate solution does not have a concentration of ammonium nitrate that is equal to or greater than 60 per cent with respect to mass. Nitric acid is not an output of this activity.

The activity does not include either the upstream production of the anhydrous ammonia feedstock or the downstream processing of the ammonium nitrate solutions to solutions with higher concentrations of ammonium nitrate, blended solution products or solid products (in a granulated, prilled or other form). As such, for the purpose of an application for assistance, the site undertaking the activity is that where the ammonium nitrate solution with a concentration of ammonium nitrate (NH4NO3) equal to or greater than 60 per cent with respect to mass is actually produced and does not extend to separate facilities which may conduct anhydrous ammonia production or the production of downstream products from the ammonium nitrate solution but not the activity as described.

Division 2 - Classification of activity

Clause 699 - Classification of activity

Clause 699 provides that the production of ammonium nitrate is an EITE activity eligible for assistance at the highly emissions-intensive rate.

Division 3 - Electricity baseline for calculating partial exemption

Clause 700 - Electricity baseline for product

Clause 700 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption in respect of the production of ammonium nitrate is 0.114 megawatt-hours (MWh) per tonne of 100 per cent equivalent ammonium nitrate (NH4NO3) with a concentration of ammonium nitrate equal to or greater than 60 per cent with respect to mass, and where the product is produced by carrying out the activity (as described in clause 698) and is of saleable quality (as defined in Regulation 22C).

Part 35 - Production of chlorine gas and sodium hydroxide (caustic soda) solution

Division 1 - Production of chlorine gas and sodium hydroxide (caustic soda) solution

Clause 701  - Production of chlorine gas and sodium hydroxide (caustic soda) solution

Clause 701 provides that the production of chlorine gas and sodium hydroxide solution (caustic soda solution (NaOH(aq))) is the chemical transformation of sodium chloride solution (NaCl(aq), brine) to chlorine (Cl2(1,g)) and sodium hydroxide solution (caustic soda solution (NaOH(aq))) that has a concentration of sodium hydroxide (NaOH) of 14 per cent or more.

Clause 701 (2) provides for the ratio of sodium hydroxide to chlorine, with the production of sodium hydroxide (NaOH) being 1:1.13 times the production of chlorine (Cl2). Clause 701(3) states the following chemical reaction must be involved in the chemical transformation:

The activity as conducted during the period used to assess the eligibility of the activity involved the electrolysis of a brine solution using membrane cell technology to produce hydrogen and chlorine gases and sodium hydroxide solution (NaOH(aq), caustic soda solution). In this process, the conditions of the concentration of sodium hydroxide (NaOH) being equal to or greater than 14 per cent with respect to mass and the stoichiometric ratio means that sodium hydroxide (NaOH) production is 1:1.13 times the production of chlorine (Cl2) by mass were both met. The hydrogen gas produced was either used as a feedstock for the downstream production of hydrochloric acid, as a fuel to generate steam or vented to atmosphere.

It is intended that alternative processes of the diaphragm or mercury cell (where environmental legislation permits the use of this technology) to produce chlorine gas and sodium hydroxide solution would be considered to fit within the activity description.

The activity description is not satisfied through the undertaking of the production of brine, nor is it satisfied by undertaking the downstream processing of the chlorine gas or sodium hydroxide solutions.

The inputs of the activity have been defined to include sodium chloride solution or brine in concentrations as needed for the production process. The outputs of the activity are chlorine (Cl2) and sodium hydroxide solution (NaOH(aq), caustic soda solution) where the concentration of sodium hydroxide (NaOH) is equal to or greater than 14 per cent with respect to mass. The final chlorine product may be in a liquid or gaseous form.

The activity does not include the upstream extraction, mining and processing of salt or the production of the brine solution. Further, the activity does not include the downstream manufacture of products produced from the chlorine and sodium hydroxide solution, or the processing of any by-products form the production of this activity.

Division 2 - Classification of activity

Clause 702 - Classification of activity

Clause 702 provides that the production of chlorine gas and sodium hydroxide solution is classified as a highly emissions-intensive activity.

Division 3 - Electricity baseline for calculating partial exemption

Clause 703  - Electricity baseline for product

Clause 703 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption for the production of chlorine and sodium hydroxide solution is 2.63 megawatt-hours (MWh) per tonne of 100 per cent equivalent sodium hydroxide solution on a dry weight basis.

The measurement of the sodium hydroxide might be in regard to the American Water Works Association standard B501-08 (ANSI/AWWA B501-08) or Australian/International equivalent.

To be eligible as a relevant product, the 100 per cent equivalent sodium hydroxide must be:

*         on a dry weight basis;

*         not recycled back into the EITE activity (such as a stream of sodium hydroxide solution recycled back into the chemical treatment step); and

*         is contained within sodium hydroxide solution that is produced by carrying on the EITE activity.

The sodium hydroxide must have been produced by carrying on the activity (as defined by clause 701) to be eligible as a relevant product. Products produced from the sodium hydroxide solution such as sodium hypochlorite are not considered to be relevant products however it is expected that the tonnes of sodium hydroxide reported might include some tonnes of sodium hydroxide which is further reacted to produce alternative products.

Part 36 - Production of fused zirconia

Division 1 - Production of fused zirconia

Clause 704  - Production of fused zirconia

Clause 704 provides that the production of fused zirconia is the physical and chemical transformation of zircon (ZrSiO4) by:

(a)        the removal of silica (silicon dioxide (SiO2) using a reductant such as carbon); and

(b)        heating the zircon to its fusion point;

to produce fused zirconia (zirconium dioxide (ZrO2) that has a concentration of zirconium dioxide (ZrO2) equal to or greater than 96 per cent.

The activity as conducted during the period used to assess the eligibility of the activity involved the removal of silica from zircon by reacting zircon with a source of carbon in an electric arc furnace and heating it to its fusion point at temperatures of around 2,800°C.

The activity description is not satisfied through the undertaking of mining and concentrating (including wet and dry concentrating and electrostatic separation) of zircon. However, the fact that a batch of fused zirconia does not have a level of purity equal to or greater than 96 per cent does not mean that the activity is not conducted at times when the purity is equal to or greater than 96 per cent in other batches.

The inputs of the activity have been defined to include any grade of zircon and a source of carbon such as coke or coal.

The output of this activity is saleable fused zirconia (zirconium dioxide, ZrO2) with a level of purity equal to or greater than 96 per cent. Silica fume is also produced as a by-product of the process.

 

The activity does not include the upstream extraction (mining) and separation of zircon from other minerals or the downstream crushing and milling of cast fused zirconia. As such, the relevant site for the application is that where the fused zirconia is actually produced and does not extend to separate sites which may conduct downstream or upstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9).

Division 2 - Classification of activity

Clause 705 - Classification of activity

Clause 705 provides that the production of fused zirconia is classified as a moderately emissions-intensive activity.

Division 3 - Electricity baseline for calculating partial exemption

Clause 706 - Electricity baseline for product

Clause 706 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption for the production of fused zirconia is 4.88 megawatt-hours (MWh) per tonne of fused zirconia with a purity equal to or greater than 96 per cent.

The tonnage of the relevant fused zirconia should be measured according to ordinary measurement rules applicable in the industry.

To be eligible for assistance, the fused zirconia must have been produced by carrying on the activity (as defined by clause 704) to be eligible as a relevant product. For example, where imported fused zirconia is blended with product produced from the activity, only the domestically produced fused zirconia would be included in the tonnes of the relevant product.

The fused zirconia must be of saleable quality (as defined by regulation 22C). In particular, the tonnes of fused zirconia which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

Part 37 - Production of iron ore pellets

Division 1 - Production of iron ore pellets

Clause 707 - Production of iron ore pellets

Clause 707 provides that the production of iron ore pellets is the physical and chemical transformation of iron ore to produce iron ore pellets for the production of steel, and where the iron ore pellets that have:

-          a concentration of iron (Fe) is equal to or greater than 63 per cent with respect to mass; and

-          a concentration of alumina (Al203, aluminium oxide) is equal to or less than 2 per cent with respect to mass; and

-          a concentration of silicon dioxide (SiO2, silica) is equal to or less than 7 per cent with respect to mass; and

-          an average diameter of between 9 and 16 millimetres.

The activity as conducted during the period used to assess the eligibility of the activity involved the pelletising and hardening of concentrated magnetite (Fe3O4) to produce iron ore pellets. In this period by-products of the activity including chips and chunks of iron ore were also produced.

It is intended that alternative production processes using any source of iron ore, subject to the condition in paragraph 22A(1), to produce iron ore pellets would be considered to fit within the activity definition.

This activity is not satisfied through the undertaking of the production of other forms of agglomerated iron ore including iron ore sinter or haematite benefaction.

The input of this activity is iron ore. For the purposes of this division, iron ore is given meaning by the conditions in paragraph 22A(1) and intended to include magnetite ore that has been concentrated and that may be in slurry form, or hematite ore that has been crushed to varying extents. Iron that has been semi-processed as per the requirements in paragraph 22A(1) is not to be treated as being input of this activity.

The output of this activity is iron ore pellets that satisfy the conditions as outlined in paragraph 22A(1).

The activity does not include the upstream extraction or production of the iron ore concentrate to the activity including the production of magnetite concentrate.  Further, the activity does not include the downstream processing of iron ore pellets including pig iron production or the recycling or further processing of the by-product iron ore chips and chunks, from the production of iron ore pellets.  As such, the relevant site for the purpose of the application is where the iron ore pellets are actually produced and does not extend to separate facilities which may conduct upstream or downstream processing of either the iron ore product or any relevant by-products but not the activity as described.

Division 2 - Classification of activity

Clause 708 - Classification of activity

Clause 708 provides that the production of iron ore pellets is classified as a moderately emissions-intensive activity.

Division 3 - Electricity baseline for calculating partial exemption

Clause 709 - Electricity baseline for product

Clause 709 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption for the production of iron ore pellets is 0.0498 megawatt-hours (MWh) per tonne of iron ore pellets on a dry weight basis.

To be eligible for assistance, the iron ore pellets must have been produced by carrying on the activity (as defined by clause 707) and must be of saleable quality (as defined by regulation 22C). In particular, the tonnes of iron ore pellets which are scrapped or recycled are not to be included in the tonnes of relevant product. Similarly, a tonne of iron ore pellets that is included in the basis for calculating assistance for this activity is not to be also included as the basis for calculating assistance under the separate activity of integrated iron and steel.

Part 38 - Production of liquefied natural gas

Division 1 - Production of liquefied natural gas

Clause 710  - Production of liquefied natural gas

Clause 710 provides that the production of liquefied natural gas (LNG) is the physical transformation of natural gas (in a gaseous state on entering the activity) to liquefied natural gas which has a methane content by mass of 70 per cent or more (in a liquid state on leaving the activity).

The activity as conducted during the period used to assess the eligibility of the activity involved the processing and subsequent liquefaction of natural gas that was taken from a petroleum reservoir. The gas underwent a feed treatment stage where hydrogen sulfide, carbon dioxide, mercaptans, mercury and water were removed from the raw gas product. Following such processing, the predominantly methane mixture was then liquefied through compression and temperature reduction in a liquefaction train to -161°C. Hydrocarbons contained in the natural gas stream that was in part taken to be liquefied in LNG were also produced into other products such as condensate, domestic gas and liquefied petroleum gas. However, the production processes associated with these other products were not assessed as part of the activity.

It is intended that alternative forms of production that do not require the feed treatment stage would be considered to fit within the activity definition, so long as at least liquefaction of natural gas takes place at the facility.

This activity is not satisfied through the undertaking of natural gas extraction and production, or through liquefied natural gas regasification. The activity is also not satisfied where the natural gas being processed remains in a gaseous state or has a concentration of methane (CH4) that is less than 70 per cent with respect to mass. 

The inputs of the activity have been defined to include natural gas in a gaseous state. This may be natural gas sourced from a petroleum reservoir as during the period used to assess eligibility or from an alternative source such as coal seam methane wells or from a domestic gas pipeline.

The outputs of the activity are defined as tonnes of LNG where the concentration of methane is equal to or greater than 70 per cent with respect to mass. The measurement of this output is expected to be conducted so that it does not include any tonnes of LNG that boil off in conveying the LNG to a transportation vessel or storage facility. The measurement of the output for the issue of free carbon units is by a tonne of LNG that is transported away from the facility, as a gas or a liquid, from the facility where the natural gas was liquefied. Audited delivery statements or contractual arrangements associated with the delivery or loading of LNG into a pipeline, truck, ships or other transportation vessels are suitable documents for calculating the produced LNG in this activity.

The activity does not include the upstream extraction or production of the natural gas to the activity. Further, the activity does not include the downstream processing of the LNG including transportation, distribution or regasification, or the processing of any by-products from the production of LNG including condensate, domestic gas and liquefied petroleum gas.

Division 2 - Classification of activity

Clause 711 - Classification of activity

Clause 711 provides that the production of LNG is an EITE activity eligible for assistance at the moderately emissions-intensive rate.

Division 3 - Electricity baseline for calculating partial exemption

Clause 712  - Electricity baseline for product

Clause 712 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption for the production of liquefied natural gas is 0.0640 megawatt-hours (MWh) per tonne of LNG that has a concentration of methane equal to or greater than 70 per cent with respect to mass.

To be eligible for assistance, the LNG must have been brought to the liquefied state by carrying on the activity as defined by clause 710 and must be transported away from the facility. LNG that has been returned to the site does not constitute eligible tonnes of relevant product.

Part 39 - Production of magnetite concentrate

Division 1 - Production of magnetite concentrate

Clause 713  - Production of magnetite concentrate

Clause 713 provides that the production of magnetite concentrate is defined as the physical transformation of magnetite ore (ore containing Fe3O4) to produce saleable magnetite (Fe3O4) concentrate that:

-          has the concentration of iron (Fe) at least 60 per cent on a dry-weight basis with respect to mass; and

-          at least 80 per cent of the material has a particle size of less than 75 microns.

The activity as conducted during the period used to assess the eligibility of the activity involved the onsite milling of magnetite ore, the magnetic separation of the magnetite particles from the ore and concentrate thickening. In this period no saleable by-products of the activity were produced.

It is intended that the alternative production processes which produce magnetite concentrate as defined would be considered to fit within the activity definition.

This activity is not satisfied through the undertaking of magnetite mining and extraction, haematite benefaction, concentration of alternative iron ores and magnetite concentrate where the conditions outlined in clause 713 are not satisfied. 

The inputs to this activity are any ore which contains magnetite (Fe3O4) and has the key property of ferrimagnetism as described in the note in clause 713.

The output of this activity is magnetite concentrate that satisfies the conditions as outlined in clause 713. Magnetite concentrate of saleable quality may be taken to include magnetite concentrate in a slurry form, whether or not this product is sold in this form to a third party or transferred internally. However, the basis of issue of free carbon units for the production of magnetite concentrate is by a tonne of 100 per cent equivalent iron (Fe) contained in the saleable magnetite concentrate and other requirements listed in clause 713.

The activity does not include the upstream extraction or production of the input to the activity including the mining and extraction of ore and the crushing and grinding of the ore that is not contiguous with the magnetite concentrate production process. Further, the activity does not include the downstream processing of magnetite concentrate, included the dewatering of magnetite concentrate slurry or the production of iron ore pellets. As such, the relevant site for the purpose of the application is that where the magnetite concentrate is actually produced and does not extend to separate sites which may conduct upstream or downstream processing of either the magnetite concentrate or any relevant by-products but not the activity as described.

Division 2 - Classification of activity

Clause 714 - Classification of activity

Clause 714 provides that the production of magnetite concentrate is an EITE activity eligible for assistance at the moderately emissions-intensive rate.

Division 3 - Electricity baseline for calculating partial exemption

Clause 715 - Electricity baseline for product

Clause 715 provides that the electricity baseline for calculating the amount of a liable entity's partial exemption in respect of the production of magnetite concentrate is 0.0826 megawatt-hours (MWh) per tonne of 100 per cent equivalent iron contained within magnetite that has a concentration of iron equal to or greater than 60 per cent on a dry weight basis and where at least 80 per cent of the material has a particle size of less than 75 microns.

To be eligible for assistance, the iron ore pellets must have been produced by carrying on the activity (as defined by clause 713) and must be of saleable quality (as defined by regulation 22C).

 


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