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Equivalent carbon price

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Equivalent carbon price for synthetic greenhouse gases

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Frequently asked questions

• General questions about the equivalent carbon price
• Information for importers
• Information for technicians
• Information for waste managers
• Information for consumers
• Exemptions to the equivalent carbon price

Last updated: 2 July 2012. FAQs are updated regularly. Anyone relying on the information published here should check regularly for updates. To receive an email alert advising when these updates are published, please subscribe to receive our News Updates

General questions

How is the government applying an equivalent carbon price to synthetic greenhouse gases?

Synthetic greenhouse gases are listed under the Kyoto Protocol. They are a family of gases grouped into three main categories:

• hydrofluorocarbons (HFCs);
• perfluorocarbons (PFCs) (but excluding gases produced from aluminium smelting); and
• sulfur hexafluoride (SF6).

Synthetic greenhouse gases generally have a high global warming potential. They account for 1-2 per cent of all greenhouse gas emissions in Australia.

Under the Australian Government's Clean Energy Future Plan, synthetic greenhouse gases have an equivalent carbon price applied to them through the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 (the Act) and associated Levy Acts. These are administered by the Department of Sustainability, Environment, Water, Population and Communities.

The new arrangements established under the Act apply to imports and exports of synthetic greenhouse gases, as well as to any manufacturing of these gases.

No synthetic greenhouse gases are currently manufactured in Australia.

As well as imports and exports of bulk gases, the Act's new controls apply to imports of products containing synthetic greenhouse gases.

The new arrangements commenced on 1 July 2012. A full list of gases falling within these three categories is set out in the fact sheet Calculating the Equivalent Carbon Price on Synthetic Greenhouse Gases.

How are synthetic greenhouse gases used in Australia?

Synthetic greenhouse gases are used in Australia for a variety of purposes, such as:

• most commonly, refrigerant gases in air conditioning and refrigeration equipment (domestic, automotive and others);
• use in some fire extinguishing systems;
• use as foam-blowing agents in the manufacture of polyurethane foams and in applications requiring thermal insulation, such as refrigerators;
• use in some aerosol products; and
• an insulating gas in the electricity supply industry.

What is the global warming potential of each synthetic greenhouse gas?

The global warming potential of each regulated synthetic greenhouse gas is identified in the following table. The values identified here can be used in Step 1 of the calculation set out in the Question above.

Gas	Chemical Formula	Global Warming Potential
hydrofluorocarbons (HFCs)
HFC-23	CHF3	11 700
HFC-32	CH2F2	650
HFC-41	CH3F	150
HFC-43-10mee	C5H2F10	1 300
HFC-125	C2HF5	2 800
HFC-134	C2H2F4 (CHF2CHF2)	1 000
HFC-134a	C2H2F4 (CH2FCF3)	1 300
HFC-143	C2H3F3 (CHF2CH2F)	300
HFC-143a	C2H3F3 (CF3CH3)	3 800
HFC-152a	C2H4F2 (CH3CHF2)	140
HFC-227ea	C3HF7	2 900
HFC-236fa	C3H2F6	6 300
HFC-245ca	C3H3F5	560
perfluorocarbons (PFCs)
perfluoromethane (tetrafluoromethane)	CF4	6 500
perfluoroethane (hexafluoroethane)	C2F6	9 200
perfluoropropane	C3F8	7 000
perfluorobutane	C4F10	7 000
perfluorocyclobutane	c-C4F8	8 700
perfluoropentane	C5F12	7 500
perfluorohexane	C6F14	7 400
sulfur hexafluoride	SF6	23 900

What effect will the equivalent carbon price have?

Applying an equivalent carbon price to synthetic greenhouse gases will encourage:

• increased recycling of synthetic greenhouse gases
• improved servicing of existing equipment to reduce leakage of synthetic greenhouse gases
• a switch to purpose-designed equipment using lower global warming potential gases, only where this is appropriate and meets relevant safety standards and legislative requirements
• innovation by manufacturers to develop safe, low global warming potential gases and suitably designed equipment for those gases.

Does the goods and services tax (GST) apply to the equivalent carbon price on synthetic greenhouse gases?

The equivalent carbon price that will be payable under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989, for the import or manufacture of synthetic greenhouse gases and products containing such gases, will not be subject to the GST.

GST and the equivalent carbon price

• GST does not apply to payments of taxes, fees and charges, except those taxes, fees and charges excluded by Division 81 of the GST Act and Regulation. If a payment, or the discharging of a liability to make a payment, of an Australian tax is not treated as the provision of consideration, the payment will not be subject to GST. An Australian tax is a tax (however described) imposed under a law of the Commonwealth, a State or a Territory.
• When enacted, the amendments entering into force under the Ozone Protection and Synthetic Greenhouse Gas Management Act 1989 will be a law of the Commonwealth which will impose the equivalent carbon price. The equivalent carbon price is an Australian tax. However, it is not of a kind of tax which is excluded by the GST Act or a regulation. Therefore, a payment, or the discharging of a liability to make a payment, of the equivalent carbon price will not be subject to GST.
• A tax, fee or charge incurred by an entity, like other things it acquires, is a business cost for that entity. In subsequent supplies made by the entity, the tax, fee or charge may become part of the pricing and that cost may be included in the calculation to arrive at the total value of the supply.

Supply chain

• The equivalent carbon price payable by the importer is not subject to the GST. For transactions in the supply chain, the normal GST treatment that applies currently will continue to apply after the consequential amendments are passed. While GST is paid at each step in the supply chain, businesses don't actually bear the economic cost of the tax. This is because they include GST in the price of the goods and services they sell and can claim credits for most GST included in the price of goods and services they buy. The cost of GST is borne by the final consumer, who can't claim GST credits.

This information is not tax advice. Companies requiring information on how the law may apply to their company's particular circumstances should approach the Australian Tax Office (www.ato.gov.au) through the usual rulings process.