The Clean Energy Future bills passed the lower house last night, and passage through the Senate looks assured, so Australia will have a carbon price by mid 2012.
Late amendments benefit waste sector
One of the most significant late amendments to the bills related to emissions from landfill. This is relevant to a lot of our local government customers. Previously, the threshold for many landfill facilities was going to be 10kt because of proximity rules that only applied to this sector. Now the threshold will be 25kt like every other facility affected by the legislation. Because landfill operators will only be liable for emissions from waste disposed of from the start of the scheme (non-legacy emissions), many operators won’t be affected at all for the first few years of the scheme, and operators that implement good abatement strategies may be able to stay below the threshold indefinitely.
Also, landfill operators will have the opportunity to reduce 100% of landfill emissions using CFI offset-credits. So, for example, a landfill operator cold invest in a forestry project to reduce their liability. While this might help reduce the cost of the liability, the other significant benefit is the potential to provide cost certainty. Landfill facilities continue to produce emissions after the facility is closed because of the time it takes waste to decompose. This means operators have to increase gate prices now to fund the liability when the facility is closed and no longer able to generate revenue.
The carbon price will be driven by the market so anticipating the size of this future liability is difficult. By investing in an offset project that will generate a stream of offset credits over time, they can fix their carbon price in future years, and so more easily manage this future liability.
While most CFI offset projects are associated with the agriculture sector and land management, the waste sector itself can produce offsets from projects that reduce legacy emissions, for example by extracting methane from closed cells at their facility for flaring or power generation. They can then bank these offset-credits to reduce their future liability.
While the waste sector will be heavily impacted by a carbon price, these late amendments provide some new opportunities to reduce the impact.