Who will be liable for Australia’s solution to pollution? an analysis of the scope of businesses’ liability under the carbon pollution reduction scheme

Consistent with achieving an international agreement to reduce greenhouse gas emissions at Copenhagen in December 2009, Australia, like the United States, is currently in the throes of having its emissions trading scheme legislation processed through Parliament. The Rudd Government is on track to have its heavily-debated Carbon Pollution Reduction Scheme (CPRS) passed during Parliament’s Winter sessions this year. If successful, Austra-lian businesses will only have until 1 July 2011 to prepare for the onerous obligations imposed upon those liable under the wide-reaching legislation. This article analyses businesses’ liability for the core reporting and surrendering obligations imposed under the CPRS. It finds that businesses and their executive officers who contravene the CPRS will not only be liable for the wide-ranging administrative, civil and criminal penalties in the CPRS itself, but they may also face civil and criminal liability under the Corporations Act 2001 (Cth), the Australian Securities and Investments Commission Act 2001 (Cth), the Criminal Code 1995 (Cth), the Trade Practices Act 1974 (Cth) and State and Territory fair trading legislation in respect of the same conduct. In particular, businesses and their executive officers should be aware of the extensive monitoring and information-gathering powers that will be conferred upon the regulatory body established under the CPRS, the Australian Climate Change Regulatory Authority, and adopt procedures to protect the disclosure to, and use by, the regulator of privileged and confidential information.

Climate change is not only coming, it is already here; and so too is the law requiring businesses to take measures to mitigate an otherwise predicted temperature rise of 4°C by the end of the century.1 Businesses already have national greenhouse and energy reporting obligations and national renewable energy targets. However, until recently, the obligations on businesses and the ramifications for failing to comply under the Australian Federal Government’s proposed form of a national emissions trading scheme (ETS) have remained somewhat elusive.

On 14 May 2009, the Rudd Government introduced into Parliament its Carbon Pollution Reduction Scheme (CPRS) comprising six Bills.2 Originally due to commence on 1 July 2010, the Government has conceded that the CPRS will not take effect until 1 July 2011. As a potential trade-off, the Government has committed to more ambitious carbon pollution targets in certain circumstances, as well as tweaking a number of other design features to accommodate concerns about the impacts of the global recession.3 Passed by the House of Representatives on 4 June 2009, the fate of the CPRS in its current form will be decided by the Senate when Parliament resumes on 11 August 2009 with the benefit of a number of Senate inquiries and the release of draft regulations to the CPRS.4

Even though the global recession defence pleaded by industry and the Opposition alike has succeeded in delaying the Government’s original timeline,5 it is clear that the introduction of the CPRS is no longer a matter of “if”, but “when”. As a result, the sooner businesses and their executive officers assess their liability under the CPRS, the better prepared they will be to avoid the raft of penalties and sanctions that can be imposed against them and the broader consequences of any failure to comply.

This article seeks to conduct that analysis on behalf of businesses generally. First, the objectives and key design elements of the CPRS are deduced to place businesses’ liability into context. Secondly, the core obligations imposed on businesses under the CPRS are extracted as a basis for assessing their liability. Thirdly, the types of businesses liable for those core obligations under the CPRS are identified, as well as any potential to transfer that liability. Finally, the scope of liability for businesses and their executive officers who fail to comply with their core obligations is investigated, both under the CPRS and beyond.

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