EXPLANATORY STATEMENT
Select Legislative Instrument 2005 No. 325
Issued by authority of the Minister for Revenue
and Assistant Treasurer
Energy Grants (Cleaner Fuels) Scheme Act 2004
Energy Grants (Cleaner Fuels) Scheme Amendment Regulations 2005 (No. 1)
The Energy Grants (Cleaner Fuels) Scheme Act 2004 (the Act) established the Energy Grants (Cleaner Fuels) Scheme, which provides grants to importers and domestic producers of cleaner fuels, including low sulphur fuels. Section 9 of the Act provides that the Governor-General may make regulations prescribing matters that are required or permitted by the Act to be prescribed, or necessary or convenient to be prescribed for carrying out or giving effect to the Act. Section 4 of the Act provides that the meaning of a ‘cleaner fuel’, the ‘start day’ and the ‘end day’ for the grant may be prescribed by the regulations. Subsection 8(1) of the Act provides that grants are calculated in accordance with the regulations.
The Regulations amend the Energy Grants (Cleaner Fuels) Scheme Regulations 2004 (the Principal Regulation) to introduce the low sulphur premium unleaded petrol component of the Measures for a Better Environment - Cleaner Fuels measure, as announced in the 2003-04 Budget. This component consists of providing a grant to importers and domestic producers of premium unleaded petrol with 50 milligrams per kilogram or less sulphur content (or low sulphur premium unleaded petrol).
The purpose of the grant is to bring forward the production of low sulphur premium unleaded petrol before it is mandated on 1 January 2008 under the provisions included in the Fuel Standard (Petrol) Determination 2001 which is made under Section 21 of the Fuel Quality Standards Act 2000. The early introduction of low sulphur premium unleaded petrol delivers environmental and health gains, through reduced emissions of hydrocarbons, oxides of nitrogen and particulates. It also facilitates the quicker adoption of more fuel efficient and greenhouse friendly engine technologies.
The Regulations prescribe:
- low sulphur premium unleaded petrol with 50 milligrams or less of sulphur per kilogram as a ‘cleaner fuel’; and
- a ‘start day’ of 1 January 2006 and an ‘end day’ of 31 December 2007;
- the grant rate for supplying low sulphur premium unleaded petrol as 1.1 cents per litre; and
- the method for calculating the amount of grant to which a recipient is entitled.
The grant scheme is administered under the Product Grants and Benefits Administration Act 2000. That Act provides the administration and compliance framework for the grant schemes administered by the Australian Taxation Office.
The Act specifies no conditions that need to be met before the power to make the proposed Regulations may be exercised.
The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.
The Regulations commence on 1 January 2006.
The Regulations have been prepared in consultation with the Australian petroleum refining industry. This industry supports the making of the proposed Regulations.
Overview
The Energy Grants (Cleaner Fuels) Scheme Act 2004 was enacted to establish a grant scheme aimed at encouraging the importation and production of cleaner fuels in Australia. This legislative initiative was designed to address the need for reducing environmental pollutants and improving air quality by incentivising the use of fuels with lower sulphur content. The Act was enacted by the Parliament of Australia and its policy objective is to promote the early adoption of cleaner fuel technologies and practices, thereby contributing to better environmental outcomes and public health. The scheme operates by providing financial grants to importers and domestic producers of cleaner fuels, facilitating the transition to more sustainable fuel practices before regulatory mandates come into effect.
The Energy Grants (Cleaner Fuels) Scheme Amendment Regulations 2005 were introduced to further refine and expand the scope of the original Act by incorporating the low sulphur premium unleaded petrol component. This regulatory update aligns with the broader government policy to encourage the production and use of low sulphur premium unleaded petrol ahead of its mandated introduction on 1 January 2008. The early introduction of these regulations aims to deliver significant environmental and health benefits by reducing emissions and promoting the adoption of advanced engine technologies. These regulations define low sulphur premium unleaded petrol as a cleaner fuel and set the grant rates and period for the scheme, ensuring a smooth transition and compliance with environmental standards.
Scope and Application
The Energy Grants (Cleaner Fuels) Scheme Act 2004 applies to importers and domestic producers of cleaner fuels within Australia, including those producing low sulphur fuels. This legislation specifically targets the energy sector by providing financial incentives in the form of grants to encourage the production and importation of cleaner fuels, thereby promoting environmental benefits and reducing emissions. The Act's jurisdiction extends across the Commonwealth, and its provisions are enforced through the subordinate Energy Grants (Cleaner Fuels) Scheme Amendment Regulations 2005 (No. 1). These regulations further detail the criteria for cleaner fuels, the timeframes for the grants, and the calculation of the grants themselves. Notably, the Act does not explicitly state any exclusions or thresholds, but these are addressed within the regulations. The grant scheme is administered under the Product Grants and Benefits Administration Act 2000, which provides the necessary framework for the implementation and compliance of the grant schemes managed by the Australian Taxation Office.
Key Provisions
The main operative sections of the Energy Grants (Cleaner Fuels) Scheme Amendment Regulations 2005 (No. 1) include the definition of 'cleaner fuel' (regulation 3), the start and end dates for the grant (regulation 4), the grant rate for low sulphur premium unleaded petrol (regulation 5), and the method for calculating the grant (regulation 6). Regulation 3 specifies that low sulphur premium unleaded petrol with a sulphur content of 50 milligrams per kilogram or less qualifies as a 'cleaner fuel'. Regulation 4 sets the period for which the grant is available, from 1 January 2006 to 31 December 2007. Regulation 5 determines the grant rate at 1.1 cents per litre for the supply of this cleaner fuel. Regulation 6 outlines the calculation method for the grant amount to which recipients are entitled.
The Regulations impose specific obligations and requirements on the parties involved. Importers and domestic producers of low sulphur premium unleaded petrol must ensure their product meets the defined sulphur content criteria to be eligible for the grant. They must also comply with the prescribed start and end dates for the grant period. Additionally, they are required to adhere to the calculation method specified in the Regulations to determine the amount of grant they are entitled to receive. These obligations are integral to the administration of the grant scheme under the Product Grants and Benefits Administration Act 2000, which provides the framework for administering and ensuring compliance with the grant schemes.
Failure to comply with the provisions of the Energy Grants (Cleaner Fuels) Scheme Amendment Regulations 2005 (No. 1) may result in various consequences. While the explanatory statement does not detail specific offences or penalties, non-compliance with regulations governing grant schemes typically leads to the disqualification from receiving the grant, potential audits, and financial repercussions. Under the Product Grants and Benefits Administration Act 2000, which oversees the administration of these grants, penalties for non-compliance may include fines and other legal actions to enforce compliance. The precise penalties would be in accordance with the broader administrative and compliance framework provided by this Act.