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CTIP and the earlier Move to an ETS

Posted on Jul 29, 2013

The Clean Technology Investment Program will face changes as a consequence of the  move to an Emissions Trading Scheme (ETS) a year earlier than expected.  Today AusIndustry posted an announcement in relation to the change.  The substantive change clarified so far is to Merit Criteria 1.  It is described on the AusIndustry site as follows:

“On 16 July 2013, the Prime Minister announced the decision to bring forward the commencement of Australia’s emissions trading scheme to 1 July 2014.  This means that Australian businesses are expected to face a carbon price of around $6 in 2014-15, lowering the carbon costs faced by manufacturers by around 75 per cent. All applications will now be considered in the context of expected 2014-15 carbon price of $6 per tonne. The closer the savings are to the expected carbon price, the more likely it is that the project will be rated as competitive.”

The impact of this is a FOUR FOLD INCREASE IN EMISSIONS PER GRANT DOLLAR assessment criteria which contributes 70% of the overall project assessment score.  With emissions abatement calculated over the duration of the new asset lifetime, lights previously scored much higher abatement per grant dollar figures than the $23/t threshold, no matter what asset life was applied.  A spot check of several customers’ abatement now indicates that some may not exceed this new threshold if replacement lights are given a short asset life, but would qualify if they applied a long asset life.

This new criteria may also more greatly prejudice against organisations under the $100M turnover threshold for 1:1 grant funding, as with a higher grant amount per dollar spent, their relative abatement per dollar must now be higher.

Depending on the number of projects eligible, this tightened criterion could potentially result in projects being awarded lower grants than the 1:1 or 1:2 ratio they are otherwise eligible for, in order that the grant amount awarded meets the required grant per tonnes abated threshold.

Further announcements and clarifications on the impact to eligibility, merit criteria and reporting are expected to follow.

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