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Australian Government Carbon Tax Chris Watkin, ABB Australia, May 2012

Introduction

© ABB Group

July 4, 2012 | Slide 2

Australian Government – Carbon Tax

The carbon price is part of the

Government‟s Clean Energy

Future Plan and will commence

on 1 July 2012

Introduction

© ABB Group



Introduction

© ABB Group



Clean Energy Plan Includes:

Carbon Tax

Renewable Energy Investment/Financing

Continuation of the RET

Investment in the Land Sector/Farming

emissions reduction

Introduction

© ABB Group



Targets

Unconditional 5% reduction on 2000

levels by 2020

Conditional 15% and 25% targets based

on International Agreements

Long Term target of 80% reduction by

2050

Introduction

© ABB Group



44 Government programs initiated

3 Programs of note:

„Energy Efficiency Opportunities‟ for

large businesses

„Energy Savings Initiative‟ with

obligations on energy retailers

„Energy Security Fund‟ offering

Carbon units free

Contracts for closure

Introduction

© ABB Group


Australian Government – Carbon Tax Who„s Liable

Do you currently report to NGERS, or operate a landfill, or are you a

natural gas supplier?

Do you operate any facilities that have over 25 kilotonnes** of direct

(scope 1) emissions after deducting emissions from:

liquid fuels, LPG, CNG and LNG;

synthetic greenhouse gases (excluding PFCs from aluminium

smelting); and

decommissioned coal mines?

Are you a natural gas

supplier?

Yes

No

Yes

No

Yes

You are

unlikely to

be a liable

entity*

You are a

liable

entity

You are

a liable

entity

You are

unlikely to

be a liable

entity*

Do you supply natural gas

to small end users?***

Yes

No * Under the Carbon Pricing Mechanism the NGER Act will be extended to cover Government facilities and facilities located in external

territories, the exclusive economic zone, waters of the continental shelf and the Joint Petroleum Development Area. Such facilities could be

liable under the Carbon Pricing Mechanism.

** Previous NGER reporting requirements only extended to constitutional corporations. Liability under the carbon pricing mechanism will

extend to a wider range of entities. Consequently some liable entities under the mechanism will not have previously reported under NGER.

*** Users with less than 25 kilotonnes of direct emissions from use of natural gas annually.

© ABB Group



The Carbon Tax is expected to cover around 500 businesses

operating in Australia

60 are primarily involved in electricity generation

100 are primarily involved in coal or other mining

40 are natural gas retailers

60 are primarily involved in industrial processes (cement,

chemicals and metal processing)

50 operate in a range of other fossil fuel intensive sectors;

and

the remaining 130 operate in the waste disposal sector.

Who„s Liable

© ABB Group

July 4, 2012 | Slide 10


Manufacturers and Importers of

Synthetic Greenhouse Gases

Who Else is Liable

© ABB Group

July 4, 2012 | Slide 11


The price per tonne of synthetic greenhouse gas will be based on the carbon price and the global warming potential for each gas relative to carbon dioxide

ie. $23 / Tonne x CO2e

Legislated under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989


© ABB Group

July 4, 2012 | Slide 12


Importers of synthetic greenhouse

gases, including in manufactured

products, will be required to pay an

equivalent carbon price based on the

global warming potential of each gas

relative to carbon dioxide.

These gases are not manufactured in

Australia


© ABB Group

July 4, 2012 | Slide 13


Products which are likely to be affected by

the proposed changes include:

air conditioners

refrigerators and freezers

specialty aerosol products

fire protection equipment

specialty solvents

high voltage electrical switchgear


© ABB Group

July 4, 2012 | Slide 14


Sulphur Hexafluoride - SF6

CO2e of 23,900

Ie. Carbon Tax of $23 x 23,900

$549,700 / Tonne

$549.70 / kg

Relevant Gas for T&D Industry

© ABB Group

July 4, 2012 | Slide 15


Importers of SF6 will require a licence from the Department of Sustainability, Environment, Water, Population and Communities

Importers of SF6 will be required to account for the amount of gas brought into Australia from July 1, 2012

A quarterly SF6 “Carbon Tax Return” must be sent to the department

Administration for Importers

© ABB Group

July 4, 2012 | Slide 16


The current plan for the Carbon Price:

Commencement price of $23 / T – 1st July 2012

Annual increase of 2.5%

1st July 2013 - SF6 $563/kg

1st July 2014 - SF6 $577/kg

On 1st July 2015 the carbon tax will transition to a flexible

price under an emission trading scheme

Including a $15 floor price

The next few years......

© ABB Group

July 4, 2012 | Slide 17


72kV LTB ~3kg SF6 = 7% increase

72kV DTB ~10kg SF6 = 12% increase

145kV LTB ~12kg SF6 = 15% increase

145kV DTB ~35kg SF6 = 25% increase

145kV GIS ~100kg SF6 = 25% increase

Impact on HV Switchgear

© ABB Group

July 4, 2012 | Slide 18


SF6 in typical 5 bay 145kV LTB AIS

substation

5 CB x 12kg x $550/kg = $33,000

SF6 in typical 5 bay 145kV DTB AIS

substation

5 CB x 35kg x $550/kg = $96,250

SF6 in typical 5 bay 145kV GIS substation

5 CB x 100kg x $550/kg = $275,000

Impact on Typical Substation

© ABB Group

July 4, 2012 | Slide 19


SF6 purchases per annum

3 tonnes

3 x $550,000 = $1,650,000/yr

Large User

9 tonnes /yr

9 x $550,000 = $4,950,000/yr

Impact on Typical Utility

© ABB Group

July 4, 2012 | Slide 20


Australia‟s CO2 Emissions = ~600Mt/yr

CO2e of SF6 estimated purchases

~60T/yr at 23,900 = ~1.4Mt/yr

Impact of SF6 vs CO2

© ABB Group

July 4, 2012 | Slide 21


In Summary

Carbon Price = $23/T CO2e

Commencing 1st July 2012

Fixed Pricing for 3 years

ETS commencing in 2015 with floor price

Synthetic Greenhouse Gases charged at

CO2e rate

SF6 rate = $550/kg

Summary

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