The Environment Committee is calling for submissions on the Climate Change Response (Late Payment Penalties and Industrial Allocation) Amendment Bill.

This bill seeks to amend provisions in the Climate Change Response Act 2002 relating to the Emissions Trading Scheme. These amendments concern the settings of industrial allocation and the penalty that applies when small forestry participants fail to surrender or repay units by the due date.

The proposed penalty amendment for small forestry participants aims to mitigate the risk of serious financial hardship to participants. As it is a strict liability penalty, the Environmental Protection Agency would be able to waive this penalty if the participant can prove absence of fault. This penalty would apply from 1 January 2025.

Industrial allocation is the provision of free emission units to firms that undertake emissions-intensive and trade-exposed activities to help them meet some of their emissions costs. This bill proposes to update the allocative baselines of industrial allocation to address the over-allocation of free emission units. Under the bill, the Minister of Climate Change will be able to review activity-specific allocative baselines after five years and update them if evidence indicates that allocations exceed emissions costs.

This bill would also provide for:

• the reassessment of the eligibility for industrial allocation using new base years to ensure that existing activities receive an appropriate level of assistance;
• options to nominate the exclusion of emissions, production, and revenue date from the 2019/2020 or 2020/2021 financial year from calculations, to avoid distortion as a result of the COVID-19 pandemic;
• simplification of the process to update allocative baselines and enable easier access to data submitted in industrial allocation applications;
• the establishment of a new high-level framework for calculating the electricity allocation factor used in allocation baselines.

Submissions close on 6 April 2023.