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© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. 2012 Annual Corporate Update Understanding the Business impacts of the Carbon Pricing Mechanism Susie Smith, Santos Limited
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Disclaimer All reasonable effort has been made to provide accurate information in this presentation. As the Carbon Pricing Mechanism is constantly evolving, with updates to legislation, regulation and determinations, this presentation should not be relied upon for any decision making.
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Agenda Introduction Overview of the Australian Carbon Pricing Mechanism Emissions Measurement and Reporting Standard Carbon Clauses Flow-on Impacts of Carbon Pricing
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Australia’s carbon emissions Source: Securing a clean energy future: The Australian Government’s Climate Change Plan, 2011
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Bipartisan support for 5% emissions reduction
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Different policies proposed to deliver same target Government’s Clean Energy Legislation Coalition’s Direct Action Plan Target5% reduction by 2020 Start date1 July 2012t.b.c. Scheme Cap and trade ETS ~ 2/3 of Australia’s emissions covered Proposed Direct Action policy - government selection Carbon Price YR1 $23; YR2 $24.15; YR3 $25.40 Flexible price trading commencing YR4 Price Collars for 3 years of flexible price No penalty for ‘Business as Usual (BAU)’ emissions - penalties not defined yet - BAU methodology not defined yet Permit allocation / funding -Emissions Intensive, Trade Exposed industries i.e. where competitor countries do not have a similar carbon impost -Funding for Renewables, Clean Energy -Energy Security Fund (coal fired power generators) -Household Assistance Package Funding through a tender process - government selection International linking Only in flexible price period (post 2015) Up to 50% international units No details
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Carbon politics is finely balanced As at 1/7/2011 House of Reps Senate Australian Labor Party 72 31 Liberal Party of Australia 60 28 The Nationals 12 6 Australian Greens 1 9 Independent / Other 5 2 Total 150 76 Minority ALP government was formed on 21 Aug 2010 with support from Independents and Greens Opposition has pledged to repeal the carbon tax Repealing the carbon tax in itself would not increase policy certainty, as there will be an economic cost to lower carbon emissions in the future Lower House requires 76 votes to pass legislation. Senate requires 39 votes to pass legislation.
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Overview of the Australian Carbon Pricing Mechanism
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Greenhouse gas emissions include Intent of the Carbon Pricing Mechanism is that the end user pays …
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Santos’ carbon emissions Direct liability (Scope 1 emissions): Direct operated reported emissions of ~3.6 mtCO2e for 2010-11 Electricity purchases (Scope 2): Indirect emissions from operated sites ~0.04 mtCO2e These costs associated with scope 2 emissions will be passed through to Santos via higher electricity prices Customer use of natural gas (Scope 3): Embodied emissions of ~16.6 mtCO2e (assumes that all products are combusted) Embodied emissions from natural gas are transferred to the buyer through an OTN (obligation transfer number) Supplier is not liable for embodied emissions in liquid fuels. Depending on its use, an equivalent carbon price may be applied for the user of the liquid fuels
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Implementation of Carbon Policy 20122013201420152016 FY 11/12FY 12/13 (yr1)FY 13/14 (yr2)FY 14/15 (yr3)FY 15/16 (yr4) Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2Q3Q4Q1Q2 2012-13 75% acquittal 15 Jun 2012-13 Final acquittal 1 Feb 2013-14 75% acquittal 2013-14 Final acquittal 2014-15 75% acquittal 2014-15 Final acquittal JOA $C cash call 30 Mar NPI 31 Oct NGER 20 Dec EEO 30 Mar NPI 31 Oct NGER 20 Dec EEO 30 Mar NPI 31 Oct NGER 20 Dec EEO 30 Mar NPI 31 Oct NGER 20 Dec EEO 30 Mar NPI Australian election due Government permit auctioning scheduled to commence* FLEXIBLE PRICE (floor/ceiling for 3-years) FIXED PRICE ($23.00; $24.15; $25.40 per tonne of CO2e) Clean Energy Bill commences (1 July 2012) Carbon trading* commences (1 July 2015) *Carbon trading will commence earlier than 2015, with the govt likely to release vintages of permits from 2014, however these ‘flexible’ permits will only be eligible for surrender from the 2015/16 compliance period. Compliance reports include: NGER =National Greenhouse and Energy Reporting; EEO = Energy Efficiency Opportunities; NPI = National Pollution Inventory.
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Joint Operating Agreement Intent of carbon pricing mechanism is to embed carbon pricing into the sale of goods and services Operator acquires permits on behalf of the Joint Venture and surrenders to government to meet liability Sales to Customers Surrender Permits $ Gas Sales Agreement $ Operator reports NGERS and Clean Energy data on behalf of the Joint Venture Government Reporting e.g. Facility JVP 1 JVP 2 JVP 3 JVP 4 Joint Venture Partners Operator prepares GHG reports and manages permit liability via JOA Carbon Pricing Mechanism: worked example Compliance obligations
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Emissions Measurement & Reporting
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Mapping emissions sources Wells Facilities Plant OPERATED FACILITIES Fuel, Flare, Vent Fugitives Fuel, Flare, Vent Fugitives Emissions are split across multiple products based on their nature: - e.g. Sales gas, ethane, LPG, condensate Sales by product Fuel, Flare, Vent
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. NGER Compliance Reporting Joint Venture GHG Reporting GHG System Product GHG Reporting Robust GHG data and reporting system Emissions determined in accordance with legislative requirements and audited annually Santos’ GHG data systems support three different functions developed to meet regulatory and business requirements.
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Flow-on impacts of Carbon Pricing
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. About two thirds of Australia’s emissions are covered by the carbon pricing scheme Source: Securing a clean energy future: The Australian Government’s Climate Change Plan, 2011 Covered Partially Covered Excluded Partially Covered Excluded Covered
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Overall impact Treasury modelling suggest that carbon pricing will increase aggregate consumer prices in 2012-13 by 0.7 per cent A further 0.2% increase is expected in 2015-16, once emissions trading starts, bringing the total CPI impact to 0.9 per cent over 4 years Source: Treasury modelling, 2011
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Electricity Treasury modelling estimates that household electricity prices will increase ~10%. The majority of this increase is attributed to electricity generation. The average carbon intensity of the National Electricity Market (NEM) is ~0.9tCO2e/MWh equating to the increase of ~$20/MWh In theory, impact on electricity costs will vary based on the carbon intensity of the source, though many other factors at play Source: Securing a clean energy future: The Australian Government’s Climate Change Plan, 2011
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Liquid Fuels Households and on-road business use of light vehicles will not face a carbon price on fuel Rail, shipping, domestic aviation, off-road transport (eg on mine sites) and non transport liquid fuels will face an effective carbon price, through changes to the current fuel tax regime Heavy on-road vehicles will not face a carbon price, but the Government intends to apply an effective carbon price on heavy on-road vehicles from 1 July 2014 There is a mechanism to ‘opt-in’ under the carbon pricing scheme rather than the fuel tax system, but Santos does not see any benefits in this Source: Clean Energy Plan, Transport Fuels factsheet, DCCEE 2011
© Chartered Secretaries Australia Ltd 2012 Prepared and presented by Santos Limited. Questions ?
Copyright © 2011 Cornwall Stodart Lawyers Enhancing Success ®. All rights reserved. Carbon tax – are you ready? Gid Meltzer, Partner Hospital Engineers.
PRME Seminar “Responsible Management of GHG Emissions” Fri 14 October 2011 Gujji Muthuswamy Department of Management Faculty of Business and Economics.
1 Carbon Tax Update Paul Stephens Director
Baker & McKenzie International is a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional.
Clean Energy Future – Carbon Pricing Mechanism and NGER Act Overview.
Viticulture– Carbon introduction Site / company name and logo here Presenter/s names here This is an Agrifood Skills Australia Ltd project developed in.
Milling – Carbon inventory energy and supply chain impacts Site / company name and logo here Presenter/s names here This is an AgriFood Skills Australia.
Building the foundations for Australia’s carbon price Australia’s experiences in developing national inventory (MRV) systems.
Embedding Energy Management – Carbon introduction Insert site / company name and logo here Insert presenter/s names here This publication was funded by.
Page 1 Carbon pricing mechanism Progressive surrender period Workshop #1 – Preparing for acquittal of liability February 2013.
Glen Whitehead October 2012 Australia’s Mandatory Company Greenhouse Gas Reporting System 1.
Presentation to the Climate Change Leadership Forum 1.Proposal for an Australian ETS 2.Update on USA, Japan & EU ETS 6 August 2008 Dave Brash.
Carbon Price and the Energy Sector June 2011 Kane Thornton Director of Strategy & Operations.
COP 18/CMP 8, Doha 1 December 2012 Australia’s Emissions Trading Scheme 1.
September 2012 MUSA September 2012 Australia’s carbon pricing mechanism.
ICAO Symposium on Aviation and Climate Change, Destination Green, 14 – 16 May 2013 Destination Green The Carbon Pricing Mechanism in Australia Presented.
March 2009 Emissions Trading in South Africa National Climate Change Summit Emily Tyler.
Carbon markets An international tool for cost-effective GHG mitigation.
2/27/ % below 2005 by 2020 cap and trade 11/15/2007 set emissions targets by 11/15/08 ~60-80% cuts by ???? (2040?) cap and trade; C inventory, reporting.
© 2011 Energetics Pty Ltd and AgriFood Skills Australia. All rights reserved. Agrifood – Carbon inventory introduction Site / company name and logo here.
Context, Principles, and Key Questions for Allowance Allocation in the Electricity Sector Joint Workshop of the Public Utilities Commission and Energy.
A practical overview from planning to practice on the destruction of methane generated from manure in piggeries. Source: Clean Energy Regulator (CER) July.
State and Regional GHG Initiatives What are the individual states doing to mitigate GHG emissions? What are the common elements? and regional differences?
1 Cap and Trade for Regulating Greenhouse Gases Presented by Scott Murtishaw Advisor to President Peevey, CPUC NASUCA Mid-Year Meeting San Francisco June.
A practical overview from planning to practice on of the capture and combustion of methane from landfill. Source: Clean Energy Regulator (CER) July 2013.
A Layman’s View of Carbon Reduction Policies. Overview History of climate change policy debate Projected impacts Australian Government’s response Opposition.
Carbon Ready Procurement III C a r b o n R e a d y.
Department of Economics Climate Change Legislation & Agriculture 2010 Iowa Turkey Federation Meetings.
BOOMERANG ALLIANCE WASTE In A Changing Climate. Boomerang Alliance Objective… By… TO BRING WASTE BACK TO ZERO 1.Adopting Waste Levies to fully recover.
Overview of Carbon Markets Voluntary & Compliance Markets: Existing Carbon Reduction Units Vladimir Litvak RBEC Energy and Environment Practice Leader.
Linkages Workshop November 14/ Outline Alberta context Regulatory framework Compliance options Carbon connections.
An Experimental Economic Analysis of Carbon Trading Options for Australia John Tisdell and Corinne Grainger Atmospheric Environment Research Centre Griffith.
Corbin Devlin McLennan Ross LLP October 19, 2007 ALBERTA’S CLIMATE: A Comparison to Canada’s Approach to Managing Greenhouse Gas Emissions.
Overview of Western Climate Initiative WESTAR Fall Meeting October 2008.
Carbon Reduction Commitment & Carbon Trading Councils Gemma Bradshaw Policy Analyst Centre for Local Sustainability.
Financial Executives Institute Greenhouse Gas Emissions and Canadian Environmental Policy This presentation includes forward-looking statements. Actual.
“Carbon Tax: The Bottom Line” CMAA Regional Summit 12 June 2012 – Griffith NSW Greg Russell.
The Climate Trust’s Experience and RGGI Offset Design RGGI Stakeholder Workshop on GHG Offsets Regional Greenhouse Gas Initiative June 25, 2004 New York,
Federal Climate Change Legislation – Charlotte Chamber September 22, 2009 Mike Stroben Director, EHS Policy.
Climate and Energy Package Open Days 2008 Workshop “ Climate change and the role of regions“ 7 October 2008 Martin Weiss European Commission DG ENV, unit.
Department of Economics Cap & Trade Legislation: What’s Proposed and What Does It Mean Iowa Meeting of ASFMRA and RLI Ames, Iowa March 23, 2010 Chad Hart.
1 ELECTRICITY PRICES AND RENEWABLE ENERGY Lucia Passamonti Strategy, Research and Documentation Dept. Italian Regulatory Authority for Electricity and.
Emissions Trading What is it?. Emissions Trading a Government initiative to address climate change via a scheme to reduce greenhouse gas emissions.
Federal Cap-and-Trade Policy: Overview of Design Options Ray Hammarlund, KCC Energy Programs Division Director Presentation to Kansas Energy Council Greenhouse.
FEDERAL CLIMATE CHANGE LEGISLATION Overview of Key Provisions of House and Senate Bills for Industrial Energy Users John Clancy Godfrey & Kahn, S.C. 780.
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World Forum on Energy Regulation IV Athens, Greece October , 2009 Energy Market Design and Promotion of Efficient Emissions Reductions John Tamblyn.
Carbon Footprinting, The Carbon Trust Standard & the CRC EAUC June 1 st 2009 Glyn Mountford – CT Standard Assessor.
Isr Institute for Sustainable Resources CRICOS No J Climate Change Policy: Challenges for Legal Reform Dr Nicola Durrant Vice-Chancellor’s Research.
Lessons from implementing the EU Emission Trading System DG Environment European Commission Side event 2009 Climate Change.
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