August 2012

THE EQUIVALENT CARBON PRICE ON

SYNTHETIC GREENHOUSE GASES IN THE

REFRIGERATION AND AIR CONDITIONING

(RAC) INDUSTRY

Under the Australian Government’s Clean Energy Future Plan a levy incorporating an

equivalent carbon price applies to synthetic greenhouse gases.

The price per tonne of synthetic greenhouse

gas is based on the carbon price and the

global warming potential for each gas relative

to carbon dioxide. Applying an equivalent

carbon price to synthetic greenhouse gases

creates a financial incentive to reduce

emissions by placing a price tag on every

tonne of synthetic greenhouse gases.

Synthetic greenhouse gases are listed under

the Kyoto Protocol, and most have a high

global warming potential. They include most

hydrofluorocarbons and perfluorocarbons

used as refrigerants. For example, the most

common refrigerant in household

refrigerators, hydrofluorocarbon R134a, has a

global warming potential 1300 times greater

than that of carbon dioxide.

The introduction of a carbon charge based on

the equivalent carbon price applies to bulk

refrigerants and imports of all products

containing these gases, including refrigeration

and air conditioning equipment. The price is

calculated at the point of import of the

synthetic greenhouse gas refrigerant, either in

bulk form or contained in equipment, or

equipment, or manufacture of the gas (if in

Australia).

Licensees may claim a refund of the carbon

charge component if they export the synthetic

greenhouse gas or equipment within

12 months of its import, or if they on-sell to a

business which exports the gas or equipment

within 12 months of its import.

What effect will the equivalent carbon price have?

Applying a carbon charge based on the

equivalent carbon price to synthetic

greenhouse gases provides an opportunity for

the industry to further promote correct

installation and regular maintenance of

affected equipment. Businesses should

discuss maintenance programs with clients

and help clients understand how to better

manage their systems. It also provides an

opportunity to discuss alternative technologies

when customers are considering system

options.

Who pays the equivalent carbon price on synthetic greenhouse gases?

Businesses that import regulated synthetic

greenhouse gases (in bulk or in equipment),

or manufacture synthetic greenhouse gases

are required to pay the carbon charge

component of the levy. Importers of bulk

refrigerant or equipment are now required to

have an import licence (either a Controlled

Substances licence or an Ozone Depleting

Substances/Synthetic Greenhouse Gas

Equipment licence) and manufacturers of

synthetic greenhouse gases are required to

have a licence allowing manufacture (a

Controlled Substances licence). These

businesses must be licensed under the Ozone

Protection and Synthetic Greenhouse Gas

Management Act 1989.

Can the carbon charge be passed on?

Each business will need to make a

commercial decision about whether some, or

all, of the carbon charge component of the

levy based on the equivalent carbon price is

passed on to consumers or other businesses

dealing with products or services containing

these gases. The Australian Competition and

Consumer Commission has provided a guide

for businesses on determining carbon price

claims www.accc.gov.au/content/

index.phtml/itemId/1017091

What is my business required to do?

As the value of synthetic greenhouse gases

will increase with the introduction of the

carbon charge, all businesses, including

refrigeration and air conditioning businesses,

will need to consider how their business uses,

stores, supplies, services, disposes of and

otherwise manages, these gases.

Refrigeration and air conditioning businesses

and technicians must continue to comply with

all legislative and regulatory requirements,

including refrigerant handling licence and

refrigerant trading authorisation conditions,

relevant codes of practice (such as the

Australia and New Zealand refrigerant

handling code of practice), work health and

safety legislation and with competition and

consumer legislation. As an example, it is

important to note that retrofitting any system

with an alternative refrigerant should only be

carried out based on written advice from

equipment manufacturers and in compliance

with applicable laws.

A compliance and audit team will oversee

compliance with the Ozone Protection and

Synthetic Greenhouse Gas Management

legislation. Authorised inspectors may visit the

premises of companies dealing with synthetic

greenhouse gases to do such things as

inspect, examine, test or take away samples

of gas for testing and/or view records relating

to the gases. Significant penalties apply for

breaches of the Act, such as importing

regulated gases without a licence.

Is the Goods and Services Tax applied to the carbon charge?

Information on the Good and Services Tax

(GST) can be found under the Frequently

Asked Questions available at

www.environment.gov.au/equivalent

carbonprice

How can I estimate the equivalent carbon

price?

An online calculator is available at

www.environment.gov.au/equivalent

carbonprice to help calculate the carbon

charge on synthetic greenhouse gases,

including blends of these gases.

More information

For more information about the Australian

Government’s administration of synthetic

greenhouse gases, including licensing details

and an online calculator, please visit the

Department of Sustainability, Environment,

Water, Population and Communities’ website

at www.environment.gov.au/equivalent

carbonprice, email

ozone@environment.gov.au or phone the

department on 1800 803 772.

For more information about the Clean Energy

Future package, go to the website:

www.cleanenergyfuture.gov.au/clean-

energyfuture/our-plan

List of some common synthetic

greenhouse gases refrigerant types

and their global warming potential

Refrigerants Global Warming

Potential*

R23 11 700

R32 650

R134a 1 300

R152a 140

R227ea 2 900

R236fa 6 300

R404a 3 260

R407c 1 526

R407f 1 555

R408a 1 944

R410a 1 725

R412a 350

R413a 1 774

R416a 767

R417a 1 955

R419a 2 403

R422a 2 532

R422d 2 232

R424a 2 025

R426a 1 352

R427a 1 828

R428a 2 930

R434a 2 662

R437a 1 567

R438a 1 890

R507a 3 300

R508a 10 175

R508b 10 350

*Global warming potential based on the International Panel on

Climate Change AR2 1995 Report

For a full list of synthetic greenhouse gases

subject to the equivalent carbon price on

synthetic greenhouse gases, refer to the

calculator available at

www.environment.gov.au/equivalent

carbonprice

List of some common refrigerant types

not subject to the equivalent carbon

price on synthetic greenhouse gases

R22 HCFC

R290 Propane Series

R406a HCFC

R409a HCFC

R409b HCFC

R717 Inorganic compound

R744 Inorganic compound

These gases are not covered under the Kyoto

Protocol framework and therefore are not

subject to the equivalent carbon price.