Skip to main content

Shortages of Some Species of Greenhouse Gases – Single-stage Regulation Impact Statement – Department of the Environment

On 13 November 2013, the Government introduced legislation that provides transitional arrangements for importers of synthetic greenhouse gases (SGGs), prior to the repeal of the carbon tax (proposed to take effect from 1 July 2014).  The arrangements provide for an exemption from the equivalent carbon tax where SGGs are imported but not released onto the Australian market before repeal of the equivalent carbon tax. Under current arrangements, the equivalent carbon tax is applied when SGGs enter the economy, either at the point of import or manufacture. The equivalent carbon tax is a significant percentage of the price of SGGs. For example, the equivalent carbon tax on HFC134a is $30.40 per kilogram in 2013-14. In comparison the cost to purchase and transport HFC134a from overseas without the equivalent carbon tax is less than $10 per kilogram. The Regulation Impact Statement (RIS) prepared by the Department of the Environment states that there may be potential shortages of SGGs prior to the repeal of the equivalent carbon tax on 1 July 2014. Shortages may occur as participants in the supply chain seek to minimise their inventories prior to the repeal of the equivalent carbon tax. In particular, importers may reduce or stop imports prior to 1 July 2014. The RIS considers that this could have flow-on impacts to other sectors of the economy, such as through products that use SGGs as an input. It is considered that removing the obligation to pay the equivalent carbon price where SGGs are imported but not released onto the Australian market before repeal of the equivalent carbon tax will address the problem. In practice the exemption applies where the importer meets three criteria: imports SGGs between 1 April 2014 and 30 June 2014; enters the gas into a Customs warehouse; and does not remove the gas from the warehouse until 1 July 2014.  The measure was generally supported by industry. The RIS considers that there are no compliance costs. A single-stage RIS was prepared by the Department of the Environment and certified as adequate by a Deputy Secretary from that Department. The Office of Best Practice Regulation has assessed that the single-stage RIS contains an adequate level of analysis and meets the Government’s best practice regulation requirements.