web viewemissions-intensive trade-exposed activity boundaries . contents. 1. the emissions-intensive...

EMISSIONS-INTENSIVE TRADE-EXPOSED ACTIVITY BOUNDARIES

Contents1. The emissions-intensive trade-exposed activity framework: activity definitions..................1

Purpose of this document....................................................................................................1

Defining EITE activities........................................................................................................1

Production calculation and electricity use methods.............................................................1

Co-mingled products and product quality............................................................................2

Additional activities..............................................................................................................2

2. Establishing the eligibility of emissions-intensive trade-exposed activities.........................2

3. What is an activity definition?..............................................................................................3

4. Principles for activity definitions...........................................................................................3

Principle 1: Inputs to outputs................................................................................................4

Principle 2: Technology neutral............................................................................................5

Principle 3: Minimal impact on investment, location and structure......................................5

Principle 4: Consistency and equity.....................................................................................6

Principle 5: Consider intermediate inputs............................................................................7

Principle 6: No overlap.........................................................................................................7

5. Summary of key considerations in defining activities..........................................................8

6. EITE activity definitions.....................................................................................................10

6.1 Glass containers production........................................................................................10

6.2 Flat glass production....................................................................................................13

6.3 Methanol production....................................................................................................15

6.4 Carbon black production..............................................................................................17

6.5 White titanium dioxide pigment production..................................................................19

6.6 Silicon production.........................................................................................................22

6.7 Zinc smelting................................................................................................................24

6.8 Integrated lead and zinc production.............................................................................27

6.9 Aluminium smelting......................................................................................................30

6.10 High purity ethanol production...................................................................................32

6.11 Magnesia production..................................................................................................34

6.12 Newsprint manufacturing...........................................................................................37

6.13 Dry pulp manufacturing..............................................................................................40

6.14 Cartonboard manufacturing.......................................................................................43

6.15 Packaging and industrial paper manufacturing..........................................................46

6.16 Printing and writing paper manufacturing..................................................................49

6.17 Alumina refining.........................................................................................................52

6.18 Tissue paper manufacturing......................................................................................54

6.19 Integrated iron and steel manufacturing....................................................................57

6.20 Carbon steel from cold ferrous feed...........................................................................62

6.21 Petroleum refining......................................................................................................66

6.22 Ethene (ethylene) production.....................................................................................70

6.23 Polyethylene production.............................................................................................73

6.24 Synthetic rutile production..........................................................................................75

6.25 Manganese production..............................................................................................78

6.26 Clinker production......................................................................................................81

6.27 Lime production.........................................................................................................84

6.28 Fused alumina production..........................................................................................86

6.29 Copper production.....................................................................................................88

6.30 Carbamide (urea) production.....................................................................................92

6.31 Sodium carbonate (soda ash) and sodium bicarbonate production..........................95

6.32 Ammonia production..................................................................................................98

6.33 Ammonium nitrate production..................................................................................100

6.34 Chlorine gas and sodium hydroxide (caustic soda) solution production..................102

6.35 Fused zirconia production........................................................................................104

6.36 Iron ore pellet production.........................................................................................106

6.37 Liquefied natural gas production..............................................................................108

6.38 Magnetite concentrate production............................................................................111

6.39 Glass beads production...........................................................................................113

6.40 Sodium silicate glass production..............................................................................115

6.41 Polymer grade propene (polymer grade propylene) production..............................117

6.42 Rolled aluminium production....................................................................................119

6.43 Reconstituted wood-based panel manufacturing.....................................................121

6.44 Coke oven coke production.....................................................................................123

6.45 Hydrogen peroxide production.................................................................................125

6.46 Ceramic floor and wall tile production......................................................................127

6.47 Nickel production.....................................................................................................129

6.48 Helium production....................................................................................................132

6.49 Dried distillers grains with solubles production........................................................134

6.50 Glass wool production..............................................................................................136

6.51 Coal char production................................................................................................138

6.52 Ferrovanadium production.......................................................................................140

6.53 Animal by-products rendering..................................................................................142

1. The emissions-intensive trade-exposed activity framework: activity definitions

Purpose of this document

The Renewable Energy Target (RET) scheme includes an exemption mechanism targeted to emissions-intensive trade-exposed (EITE) activities. The intention of the RET EITE exemption scheme is that electricity used in carrying on an EITE activity is exempt from costs associated with the RET. As part of the package of reforms to the RET legislation in 2015, the Parliament increased the rate of exemption for EITE activities to 100 per cent in respect of electricity used in undertaking an EITE activity.

This document is the Emissions-Intensive Trade-Exposed Activity Boundaries instrument referred to in regulation 22ZHC of the Renewable Energy (Electricity) Regulations 2001 (the Regulations). It describes the boundaries of EITE activities which are published in Schedule 6 of the Regulations for the purpose of determining an amount of exempt electricity. In particular, the activity boundaries are relevant to determining whether or not electricity use at a site of an EITE activity is ‘consumed in carrying on the activity’ within the meaning of paragraph 22ZHC(2)(a) of the Regulations.

Defining EITE activities

The process for determining activity definitions and the selection of relevant products involves extensive stakeholder consultation to ensure the technical accuracy of the definitions. The assessment of each EITE activity has been in accordance with a paper entitled Establishing the eligibility of activities under the emissions-intensive trade-exposed assistance program, first published in December 2009, and additional supplementary guidance materials.

In practice, defining the activity for eligibility serves two purposes: first, it provides the basis upon which data is provided to ascertain whether an activity is eligible for exemption; second, it defines the EITE activity and, until 2020, its allocative baseline for the purpose of establishing the activity in the regulations.

The boundary of EITE activities under the RET scheme is defined by electricity consumed in specific physical and/or chemical transformations that are part of manufacturing processes. The language of ‘physical’ and/or ‘chemical’ transformations is used to capture the range of ways that inputs may be processed into the appropriate outputs.

The activity definitions published in this document list specific inclusions and exclusions to help define the boundary of the electricity used in carrying out the activity. Where relevant activity definitions use the same wording when referring to inclusions and exclusions in order to ensure consistency.

Production calculation and electricity use methods

Following amendments made in December 2017, the Regulations allow for most participants in the RET EITE scheme to select either a ‘production calculation method’ or an ‘electricity use method’ to determine the quantity of exemption they are eligible to receive. The Regulations require all scheme participants to transition to the electricity use method by 2020.

Under both the production calculation method and the electricity use method, EITE participants must demonstrate that they produce a ‘product’ or ‘relevant product’ to qualify for exemption. For each activity, the regulations make clear that each of the relevant products must have been produced by, or otherwise associated with, the carrying out of the EITE activity.

1

Co-mingled products and product quality

Where listed inputs and non-listed inputs are co-mingled, an appropriate apportionment of outputs will be necessary to determine the amount of electricity used in producing the relevant product(s). For example, if a partly processed product which is not defined as an input in the activity definition is placed in a furnace and an output is produced which meets the general specifications for a relevant product (e.g. the concentration requirement), electricity consumed in producing that output should not be included in the calculations upon which the amount of exemption is based. This is because it was not ‘produced by carrying on the EITE activity’ as defined.

Activity definitions also refer to the manufacture of products with certain qualities. For example, to conduct the activity of silicon production, the silicon product must have a silicon concentration of equal to or greater than 98 per cent. It is recognised that production decisions or failures at a facility may mean that some of the output has a concentration of less than 98 per cent. This does not mean that the activity is not conducted at the facility. It simply means that the output which is below 98 per cent concentration should not be included in the amount or volume of the relevant product upon which the exemptions are calculated under the production calculation method. Electricity use associated with small amounts of substandard product produced while producing relevant products is still considered to be part of carrying out the EITE activity.

Some relevant products, such as in the methanol production activity, are calculated on a 100 per cent equivalent basis. In this case, the amount is the mass of the pure product contained within the product which is used as the basis for the calculation of the exemption. For methanol, it is the mass of the actual methanol compounds within the solutions of methanol which have a concentration of methanol equal to or greater than 98 per cent with respect to mass.

Additional activities

Additional activities will be added to Schedule 6 of the Regulations if eligible in accordance with the published criteria. This document will be updated at those times to include guidance on the boundaries of those activities.

2. Establishing the eligibility of emissions-intensive trade-exposed activities

Under the EITE framework, exemptions are targeted at the activity level, rather than at the industry, company or facility level as it allows exemptions to be provided effectively and equitably. Provision of exemptions to an entire company or facility may provide a relative benefit to some entities over others based purely on their physical or corporate structure. Targeting an exemption to a specific activity avoids incentives to alter a company or facility structure to maximise the exemption, and allows the exemption to be provided on an equitable basis across a diverse range of industries.

Economic and financial reporting is not typically conducted on an activity basis, and as such, the assessment of an activity for eligibility requires separating the activities within a production process to determine the particular part of the process that would attract the material RET cost to which the exemption should be targeted.

The overarching approach is to define activities in a way that targets exemptions to the most emissions-intensive trade-exposed processes in the economy and, as far as possible, is applied consistently across industries. In doing so, it is recognised that there are inherent synergies between parts of production processes, and that those synergies can vary from one

2

industry to another. It is also recognised that the determination of activity boundaries cannot be a simple mechanical exercise.

The following section describes the principles that have guided the development of activity definitions and outlines the range of considerations that these principles imply. In some situations, these imply a straightforward determination of activity boundaries, while in others the different considerations need to be weighed against each other.

3. What is an activity definition?

Each activity definition consists of the following parts:

• A description and output which sets out the inputs in the production process and the basic physical and/or chemical transformation which must be carried out for the activity to be conducted. The output defined in the activity definition is relevant to calculating revenue or value added for the eligibility assessment.

• A basis for allocation, which is a metric associated with production from the activity, and upon which allocations in relation to the activity are made under the production calculation method. The metric is the saleable tonnes or kilolitres of the primary output from the activity that is traded internationally or competes with imports.

• Inclusions and exclusions which define the boundaries around the activity and set out which electricity use should be, or should not be, attributed to the activity for the purposes of data collection. Some of these are general across all activities, and some are specific to the activity.

4. Principles for activity definitions

A number of principles guide the development of EITE activity definitions. These are:

1. Inputs to outputs - An activity consists of the chemical or physical transformation of inputs to produce a given set of outputs.

2. Technology neutral - Activities should not be differentiated by the technology employed, the fuel used, the age of the plant or the quality and types of feedstock used.

3. Minimal impact on investment, location and structure - The approach to establishing boundaries around activities should have minimal impact on business investment, location and structure decisions.

4. Consistency and equity - Boundaries around activities should be consistently and equitably applied across industries.

5. Consider intermediate inputs - In determining the boundaries around activities, consideration is given to the scope for intermediate inputs produced within the activity to be substituted for bought-in inputs.

6. No overlaps - There should be no overlap between different activity definitions to ensure that it would not be possible to receive exemption more than once for a given quantum of electricity (under the production calculation method).

These principles are further elaborated below.

3

Principle 1: Inputs to outputsAn activity consists of the chemical or physical transformation of inputs to produce a given set of outputs—the identification of inputs and outputs seeks to ensure uniformity of treatment across entities conducting activities. Identification of the chemical or physical transformation taking place is important because it defines the activity without regard to specific equipment or technology, which may change over time.

The description of an activity must have a clear starting point (which is the defined input or inputs that are used for the physical or chemical transformation) and a clear end point at which an output is produced. The electricity use that occurs between those points is relevant to the activity. Electricity use outside those boundaries is not regarded as part of the activity.

One implication of this principle is that the activity definition is focused on particular processes in the economy and is not concerned with who has operational control over each part of the activity. While the operational control of particular sites conducting EITE activities will be relevant to applying the other principles (particularly Principles 3 and 4), operational control does not determine where activity boundaries should be drawn.

The activity description should be kept at a high level and should seek to avoid explicitly mentioning the various steps in the particular transformation taking place. Therefore, the inclusions section of the definition deals with data collection issues in a practical and pragmatic way, noting that electricity use associated with processes which are integral for, and essential to, the defined physical or chemical transformation should be included within the activity boundary. This includes processes that are necessary to meet environmental obligations, and processes that are necessary to extract materials which are reused in the primary activity. Since operational control does not determine boundaries, this also means that processes which may be subcontracted out (such as the production of oxygen and nitrogen) may still fall within the activity boundary.

This principle also means that it is necessary to determine what the ‘outputs’ of an activity are, for assessing the eligibility of the activity for exemption.

For the eligibility assessment to be conducted fairly across different activities, it is important that all of the valuable products produced by a particular activity that are likely to have a material impact on the overall eligibility assessment be included as outputs of an activity.

This implies that revenue from both the primary products produced by the activity and valuable ‘co-products’ (which are generally regarded as essential to the business model for the relevant activity) be included in the eligibility assessment.

However, in determining whether revenue from particular products should be included in the eligibility assessment, EITE activities often produce low-value products from ‘waste’ materials from the principal process or waste materials from which some further value may be extracted. These are often referred to as ‘by-products’. These products are generally not significant to the business of producing the principal outputs, are often transferred within the firm and do not attract a market price. In many cases, it would be impractical and administratively burdensome to measure the value of all such products. The eligibility assessment does not require revenue associated with such products to be taken into account. Where a by-product from a production

4

process is traded at a market price, the material value of this trade would be included in the revenue of the activity.

To summarise, eligibility assessments include the revenue from all primary products and from valuable co-products produced by the activity. In the assessment of whether revenue from by-products is included for the eligibility assessment, consideration is given to the materiality of revenue from the by-products, compared to the total revenue from the activity.

Principle 2: Technology neutral

Activities should not be differentiated by the technology employed, the fuel used, the age of the plant or the quality and types of feedstock used.

This principle implies that activity definitions should avoid technology-specific references or overly narrow descriptions of inputs or processes. Such references or descriptions could exclude potential technologies which enable the same general inputs to be transformed into the same relevant outputs. Therefore, it is inappropriate to specify particular fuel sources in activity descriptions.

Principle 3: Minimal impact on investment, location and structure

The approach to establishing boundaries around activities should have minimal impact on business investment, location and structure decisions—the definitions of activities should seek to minimise the influence that the provision of exemption in respect of the activity has on other decisions made by a firm, such as whether to co-locate different parts of its production process.

Businesses are expected to organise their operations in a rational way to maximise their returns, including taking advantage of cost reductions that may flow from operational efficiencies. However, if incentives were created to structure businesses in particular ways to maximise exemptions under the policy, it is likely that they would be economically inefficient and could restrict competition in markets, to the detriment of consumers. These considerations also apply upstream and downstream of the EITE activity in the production chain.

In many circumstances, it is appropriate to deem an activity to end at the point at which the first traded product is produced. This recognises the fact that other parties may already, or may wish to, purchase the traded product and independently conduct the subsequent processing of that product. Providing an exemption to a person who conducts an integrated process and not to a person who undertakes the later steps of a process could unfairly advantage integrated participants over non-integrated participants in the market.

The fact that parts of a potential activity are not co-located is often an indication that two or more different activities may be taking place and that third parties may invest in only one part of the production chain. Conversely, while co-location of processes may suggest that a single activity is conducted, further investigation is required because there are a range of reasons why firms may choose to conduct related but separate activities at a single location.

Where particular processes are almost always co-located with the most emissions-intensive process in the activity (in Australia or elsewhere), it is less likely that a definition which includes the co-located processes would distort future investment decisions (including decisions by potential new entrants). In this situation, consideration may be given to including the particular processes within a single activity definition, as long as consideration is given to

5

Principle 4, which highlights the importance of consistently and equitably treating similar activities across the economy.

Principle 4: Consistency and equity

Boundaries around activities should be consistently and equitably applied across industries—the application of EITE exemptions across the entire Australian economy requires consistent treatment of activities that are not directly related to an emissions-intensive activity. For example, the electricity consumed by auxiliary activities such as head office and administrative operations should either be included in all activity definitions or excluded from all activity definitions.

Ensuring that activities are defined and boundaries determined consistently across and within industries is particularly important to ensure the integrity and equity of the exemption program. It would be inequitable if an exemption was provided in relation to a particular process in situations in which it was associated with an emissions-intensive activity, but not in other situations.

For example, it would be inequitable for an exemption to be provided for electricity consumed in head office and administrative operations when they are associated with one EITE activity, but not included in the activity boundary for another activity. Similarly, it would be inequitable for the electricity used in such operations to be included within the activity boundary when they are co-located with the EITE activity, but not included if the process was not co-located. Head office and administrative operations are activities which all firms in the economy must undertake, irrespective of whether they are conducting an EITE activity. Therefore, electricity used in such activities will not be included within any EITE activity boundary.

Similarly, it would be inconsistent and inequitable for transportation emissions to, from or between locations conducting an activity to be included for EITE activities. Among entities conducting a given EITE activity, there are considerable differences in who transports various products and how much transportation takes place. This depends on business decisions that are quite separate from the EITE activity itself. Accordingly, the transportation of inputs and outputs to and from storage at the same location of the activity is excluded from all activity definitions. However, emissions associated with the movement of products at the location and within the boundary of the EITE activity is included for all EITE activities, because that transport is properly regarded as integral and essential to the defined transformation taking place.

Where intermediate goods are moved between locations conducting a given activity, those movements are a form of transportation and are excluded from the activity boundary.

Consistent treatment is particularly important for activities that are similar in nature. For example, the mining and extraction of raw materials is undertaken as an important part of many value chains across the economy. It would be inequitable to provide exemption for mining and extraction processes in one industry where such processes are co-located with downstream processing activities, but for similar exemption not to be provided where mining and extraction processes are undertaken on a stand-alone basis. For these reasons, mining and extraction activities are separate to the downstream physical and chemical transformation that takes place in a production process and are excluded from the activity boundary.

Finally, across EITE activities there is a range of downstream, secondary processing of outputs to transform bulk, homogeneous products into consumer goods. It would be

6

inequitable to include downstream processing of this nature for some activities but not others. Therefore, downstream activities should be independently defined and assessed against the eligibility thresholds.

Principle 5: Consider intermediate inputs

In determining the boundaries around activities, consideration is given to the potential for intermediate inputs produced within the activity to be substituted for bought-in inputs—there is a risk of windfall gains if an activity is defined to encompass an intermediate input that could be sourced from an alternative domestic or overseas supplier.

This principle is focused on ensuring that activity definitions do not facilitate investment leakage of part of an activity. For example, some transformations of a raw material to a traded output include the production of an intermediate product. In some situations, the intermediate product may be partially substitutable with an input which could be bought in from elsewhere, and allocating only on the final output of the activity could create an incentive to buy in the intermediate product rather than produce it on site. The bought-in substitute may also have received exemption as a separate activity within Australia or have been created in a jurisdiction without a program similar to the RET.

One way of avoiding this is for activity definitions to be defined very narrowly, with multiple activity definitions for each production process. However, this is not practical, appropriate or necessarily equitable in all circumstances.

Where there remains the possibility for intermediate inputs to be bought in, a number of options can be considered to reduce or minimise the risks outlined above. In particular, allocations could be made in relation to the production of the intermediate input as well as the final product. These sub-activity allocations would reflect the electricity intensity of production at each point in the process. In this case, both the intermediate product and the final product would be listed as a ‘basis for allocation’ in relation to the activity, and the risk of investment leakage or windfall gains would be mitigated.

The use of sub-activity allocations in this way is more appropriate than more interventionist methods of addressing the issues, such as narrowly defining activities or specifying minimum proportions of the intermediate input which need to be produced on site for the activity to be conducted. These latter methods are judged likely to have more significant impacts on, and place constraints on, future business decisions by the operators of the activity.

The risk of windfall gains associated with bought-in inputs is reduced under the electricity use method. Where the electricity use method is applied, the substitution of intermediate product with an input bought in from elsewhere should reduce the amount of electricity consumed in manufacturing the relevant product at a site.

Principle 6: No overlapThere should be no overlap between different activity definitions—activity definitions should be determined to ensure that it would not be possible to receive exemption more than once for a given quantum of electricity used.

This principle is important for determining how many separate activities should be defined in relation to particular integrated processes, to ensure that a particular process cannot qualify for exemption as two different activities under the production calculation method.

7

There may be good reasons why a particular step in a production process is sometimes regarded as part of a wider activity as well as a stand-alone activity within an integrated process of transformation. The Regulations outlining eligible activities are designed to clearly differentiate these circumstances to exclude the possibility of double exemptions under the production calculation method for the same process.

For example, one activity could involve the production of product X, while another activity could involve the integrated production of products X and Y. Operators of the second activity should not be eligible for exemption in relation to their production of product X as a stand-alone activity if they are receiving exemption for that production as part of the integrated activity producing X and Y.

Generally, activities should ideally be defined in such a way that the same transformation is not part of two different activities (where both may be EITE activities or one may be eligible and another not). Apportionment in such a circumstance risks providing an exemption twice for the same electricity, or risks inequity if a high-value product is excluded from one activity to increase its exemption rate or to make it meet the emissions-intensity threshold for exemption. Where multiple products are produced from a common emissions-intensive step, they are better regarded as co-products of an integrated activity and may require separate bases for allocation, reflecting the relative emissions intensity of the different products produced from the activity.

5. Summary of key considerations in defining activities

To summarise, the principles outlined above lead to a number of key considerations that guide the determination of activity definitions. In some situations, these imply a straightforward determination of activity boundaries, while in others the different considerations need to be weighed up against each other.

The key considerations are as follows:

• The activity description should focus on the transformation of inputs to outputs in a general, inclusive and technology-neutral manner.

• The activity will often end at the first traded product after the most emissions-intensive step in the production process, unless subsequent traded products can be included consistently in the industry, equitably in relation to other industries, and without distorting investment, location and structural decisions.

• Activity boundaries include the direct emissions from, and electricity use of, machinery, equipment and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity description.

• A lack of operational control should not limit the inclusion of electricity used in an activity (such as the production by an external party of oxygen and nitrogen used in the activity).

• The co-location of processes across an industry is an important consideration in determining activity boundaries, but not all co-located processes are necessarily included within an activity boundary.

• Mining and extraction activities should be defined and assessed against the eligibility thresholds separately from further downstream processes.

8

• Transportation is generally considered a separate activity (although emissions from the on-site movement of intermediate goods may be included within an EITE activity boundary).

• Complementary activities, such as packaging, head office, administrative and marketing operations, either at the same location as the activity or elsewhere are excluded from the activity boundary.

• All outputs resulting from the activity which attract significant value should be taken into account in the eligibility assessment.

• Integrated activities producing multiple outputs can be considered appropriate where it is not possible or practical to separate the transformations of parts of the activity. In these circumstances, sub-activity baselines should be considered to address the perverse incentives that may result from an integrated treatment.

9

6. EITE activity definitions

The text in this section is taken from both the explanatory statements to amendments to Schedule 6 of the Regulations and the activity definitions published as part of determining the eligibility of each activity. It is republished here for convenience.

The definition of each EITE activity in each Part to Schedule 6, and as reproduced here, is divided as follows: Division 1 of each Part defines the transformation of input(s) to output(s) which constitutes

an EITE activity. Division 2 of each Part classifies each activity as highly emissions-intensive or moderately

emissions intensive. Division 3 of each Part sets out the electricity baseline for calculating the amount of a liable

entity’s exemption in respect of that activity. In doing so, it defines one or more relevant products which each have a particular number of megawatt hour (MWh) of electricity associated with their production.

6.1 Glass containers production

Part 2 Production of glass containersDivision 1 Production of glass containersClause 602 – Production of glass containers

This clause provides that production of glass containers is the physical and chemical transformation of silica (silicon dioxide (SiO2)) and other raw and recycled materials (such as cullet) to produce blown or pressed glass containers, by controlled melting and forming in a contiguous process.

The activity as conducted during the period used to assess the eligibility of the activity involved sending silica obtained from sand and some cullet through a furnace to produce glass container products such as jars and bottles. Annealing ovens and forming machines were also used.

It is intended that the alternative processes of the production of borosilicate glass to produce borosilicate glass containers (such as pyrex) and the production of glass containers entirely from cullet fit within the activity description.

To produce glass containers, the controlled melting and forming may use both the ‘blow and blow’ method and/or the ‘press and blow’ method. Both production methods satisfy the description of the activity.

The activity description is not satisfied through the undertaking of washing and cleaning of a glass container for reuse in its same physical form.

The inputs of the activity have been defined to include any source of silica and recycled materials. There are no limits on the amount of raw compared to recycled materials that may be used.

Glass containers are jars, bottles or other containers used for the storing of products.

The activity does not include the quarrying of silica, sorting and processing of cullet or downstream processing of glass containers (such as labelling). As such, the relevant site for the exemption is that where the glass containers are actually produced and does not extend to separate sites which may conduct either mining of silica, sorting of cullet, washing of glass containers, labelling or distribution of glass containers but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those

10

sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

InclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be included within the activity boundary are:

the direct emissions from, and electricity use of, machinery, equipment and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example:

o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where they involve the recovery of materials for

re-use within the activity or are necessary for the activity to proceed as described;

o onsite processing of waste materials from the activity to comply with Commonwealth, State or Territory obligations;

waste heat recovery within the activity boundary; and steam consumed within the activity boundary.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are not taken to relate to the activity and must be excluded are those associated with:

transportation of inputs used in the activity to storage at the same location as the activity;

transportation of the output from the activity from storage at the same location as the activity;

complementary activities, such as packaging, head office, administrative and marketing operations, either at the same location as the activity or elsewhere;

emissions associated with the generation of electricity on the site where the activity is conducted;

extraction and production of all raw materials; collection of external recycled cullet from a location that is not the same as the activity

and the subsequent processing and transport of the cullet not at the same location as the activity; and

secondary finishing of glass containers such as printing / labelling, treatment for chemical resistance and coating.

Division 2 Classification of activityClause 603 – Classification of activity

This clause provides that the production of glass containers is classified as a moderatelyemissions-intensive activity.

Division 3 Electricity baseline for calculating exemptionClause 604 – Electricity baseline for product

This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of glass containers is 0.308 MWh per tonne of blown and pressed glass containers.

The tonnage of the relevant glass containers should be measured accordingly to ordinary measurement rules applicable in the industry.

11

To be eligible as a relevant product, these glass containers must be: produced by carrying on the EITE activity; and of saleable quality.

The glass containers must have been produced by carrying on the activity as defined by clause 602 to be eligible as a relevant product. For example, containers which are just washed for reuse will not have been transformed by the activity as defined and will not be relevant products even if they were sold in the same batch as product which did result from a transformation.

The glass containers must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of containers which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable glass bottles but those bottles are then remelted into the same or a different type of glass container, their tonnage should be counted only once for the definition of a relevant product.

12

6.2 Flat glass production

Part 3 Production of bulk flat glassDivision 1 Production of bulk flat glassClause 605 – Production of bulk flat glass

This clause provides that the production of flat glass is the physical and chemical transformation of silica (silicon dioxide (SiO2)) and other raw and recycled materials (such as cullet) to produce bulk flat glass products, through controlled melting and forming in a contiguous process.

The activity as conducted during the period used to assess the eligibility of the activity involved melting sand/quartz and some recycled glass in a furnace to produce bulk flat glass products.Annealing ovens and forming machines were also used. The float glass and rolled glass methods of production were both used to produce flat glass during the assessment period.

Other production methods to produce flat glass are likely to satisfy this activity definition.These include the sheet and plate glass methods of production.

The activity description is not satisfied through the undertaking of cutting, polishing, washing and cleaning of flat glass for reuse in its same physical form.

The inputs of the activity have been defined to include any source of silica and recycled materials. There are no limits on the amount of raw compared to recycled materials that may be used.

The output of this activity is bulk flat glass products, including wired glass and patterned glass.

The activity does not include the extraction of silica, sorting of cullet or secondary processing of flat glass products (such as secondary coating, laminating, toughening, mirroring, printing, cutting, edgeworking, insulating, glazing, encapsulating, extrusion assembling and moulding).

As such, the relevant site for the exemption is that where the flat glass is actually produced and does not extend to separate sites which may conduct either extraction of silica, sorting of cullet, secondary processing or distribution of flat glass products but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


The direct emissions from, and electricity use of, machinery, equipment and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example:

o machinery used to move materials within and as part of the activity, including mobile equipment;

o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where they involve the recovery of materials for


o onsite processing of by-products and waste materials from the activity to comply with Commonwealth, State or Territory obligations;

13

o furnaces;o primary coating and trimming/cutting to produce bulk flat glass.

waste heat recovery within the activity boundary; steam consumed within the activity boundary; production of compressed air used as a utility; and production of nitrogen and hydrogen used as atmospheric gases.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are not taken to relate to the activity and must be excluded are those associated with: – transportation of inputs used in the activity to storage at the same location as the activity;




extraction and production of all raw materials; collection of external recycled cullet from a location that is not the same as the activity

and the subsequent processing and transport of the cullet not at the same location as the activity; and

secondary finishing of bulk flat glass such as secondary coating, laminating, toughening, mirroring, printing, cutting, edgeworking, insulating, glazing, encapsulating, extrusion assembling and moulding.


This clause provides that the production of flat glass is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of flat glass is 0.276 MWh per tonne of bulk flat glass.

The tonnage of the relevant bulk flat glass should be measured accordingly to ordinary measurement rules applicable in the industry.

To be eligible as a relevant product, flat glass must be: produced by carrying on the EITE activity; and of saleable quality.

The flat glass must have been produced by carrying on the activity as defined by clause 605 to be eligible as a relevant product. For example, entities that do not produce flat glass products but only cut flat glass into different sizes for use will not be considered to have produced flat glass by carrying on the activity as defined, and in this situation, the flat glass will not be relevant products.

The flat glass products must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of flat glass which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable flat glass which is then remelted into the same or different type of flat glass, their tonnage should be counted only once for the definition of a relevant product.

14

6.3 Methanol production

Part 4 Production of methanolDivision 1 Production of methanolClause 608 – Production of methanol

This clause provides that the production of methanol is the chemical transformation of one or more of the following:(a) hydrocarbons;(b) hydrogen feedstocks;(c) carbon feedstocks;(d) oxygen feedstocks;to produce liquid methanol (CH3OH) in which the concentration of methanol is equal to or greater than 98 per cent.

The activity as conducted during the period used to assess the eligibility of the activity involved the production of methanol from natural gas and oxygen.

It is intended that alternative processes involving the use of alternative feedstocks including ammonia and carbon dioxide or synthesis gas (a mixture of hydrogen, methane and carbon monoxide) to produce methanol, where the concentration of methanol is equal to or greater than 98 per cent with respect to mass, is considered to fit within the activity description.

The activity description is not satisfied through the undertaking of methanol production that does not have a concentration of methanol that is equal to or greater than 98 per cent with respect to mass.

The inputs of the activity have been defined to include any source of hydrogen, carbon and oxygen that may be available.

The activity does not include the upstream extraction or production of the input to the activity including the production of natural gas, synthesis gas or other hydrogen, carbon or oxygen feedstock. As such, the relevant site for the purposes of the exemption is that where the methanol is actually produced and does not extend to separate sites which may conduct upstream processing but not the activity as described. Generally, it is expected that where upstream extraction or production processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

InclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be included within the activity boundary are: The direct emissions from, and electricity use of, machinery, equipment and processes

which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: - machinery used to move materials within and as part of the activity; - controls rooms, laboratories, maintenance workshops; - machinery used to create non-electrical energy for use in the activity; - the processing of by-products where they involve the recovery of materials for re-use

within the activity or are necessary for the activity to proceed as described; and - onsite processing of waste materials from the activity to comply with Commonwealth,

State or Territory obligations. Waste heat recovery within the activity boundary Steam consumed within the activity boundary

15

Production of oxygen for use as a feedstock within the process Production of nitrogen used as a utility

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are not taken to relate to the activity and must be excluded are those associated with: transportation of inputs used in the activity to storage at the same location as the activity transportation of the output from the activity from storage at the same location as the

activity complementary activities, such as packaging, head office, administrative and marketing

operations, either at the same location as the activity or elsewhere emissions associated with the generation of electricity on the site where the activity is

conducted


This clause provides that the production of methanol is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of methanol is 0.49 MWh per tonne of 100 per cent equivalent methanol.

The tonnes of methanol should be reported on a 100 per cent equivalent basis, that is, the tonnes of pure methanol contained within the methanol reported as the output of the activity.

The relevant standard for determining the concentration of methanol in the final saleable product was British Standard BS506, Part 1, Methanol Specification.

The methanol must have been produced by carrying on the activity as defined by clause 608 to be eligible as a relevant product. Accordingly, the methanol must have been produced to have a concentration of equal to or greater than 98 per cent from the relevant inputs to be included in the tonnes of relevant product.

16

6.4 Carbon black production

Part 5 Production of carbon blackDivision 1 Production of carbon blackClause 611 – Production of carbon black

This clause provides that the production of carbon black is the chemical transformation of gaseous or liquid hydrocarbons to produce a colloidal carbon material (known as ‘carbon black’) in the form of spheres or of fused aggregates of the spheres. The particle size of the colloidal carbon must be below 1 000nm in at least 1 dimension.

The activity as conducted during the period used to assess the eligibility of the activity involved the combustion of heavy liquid hydrocarbon feedstocks through the furnace black process and subsequent wet pelletisation to produce a saleable carbon black product.

It is intended that alternative processes to produce carbon black such as the thermal black, acetylene black and chanel black processes will fit within the activity description.

The activity description is not satisfied through the production of the raw material inputs to the process, for example petroleum refining to produce cracker bottoms or coal tar pitch. Similarly coal extraction and processing, petroleum or refinery coke production and carbon anode production are also not considered to fall within this definition.

The inputs to the activity have been defined to include any gaseous or liquid hydrocarbons. This may include solid hydrocarbons which have been gassified.

The activity does not include the downstream processing of carbon black to reduce the water content of the finished product. As such, the relevant site for the purposes of the exemption is that where the carbon black is actually produced and does not extend to separate sites which may conduct a drying process but not the activity as described. Generally, it is expected that where drying processes are carried out on a standalone basis, those sites are not regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: - machinery used to move materials within and as part of the activity- controls rooms, laboratories, maintenance workshops;- machinery used to create non-electrical energy for use in the activity;- the processing of by-products where they involve the recovery of materials for re-use

within the activity or are necessary for the activity to proceed as described; and- onsite processing of waste materials from the activity to comply with Commonwealth,

State or Territory obligations Waste heat recovery within the activity boundary Steam consumed within the activity boundary The combustion of tail gas The wet pelletisation process Recycling of carbon black within the activity boundary

17

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are not taken to relate to the activity and must be excluded are those associated with: transportation of inputs used in the activity to storage at the same location as the activity transportation of the output from the activity from storage at the same location as the

activity complementary activities, such as packaging, head office, administrative and marketing

operations, either at the same location as the activity or elsewhere emissions associated with the generation of electricity on the site where the activity is

conducted


This clause provides that the production of carbon black is classified as a highly emissions intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the carbon black is 0.514 MWh per tonne of pelletised carbon black.

The tonnes of carbon black reported should be those of saleable quality measured on a dry weight basis. For this purpose, carbon black which is produced but then reprocessed should be included only once as a relevant product.

Relevant standards for the measurement of the carbon black product include: ASTM D1510 - 08c Standard Test Method for Carbon Black—Iodine Adsorption Number

and ASTM D2414 - 08a Standard Test Method for Carbon Black—Oil Absorption Number

(OAN).

To be eligible as a relevant product, the pelletised carbon black must be produced by carrying on the EITE activity and be of saleable quality.

The pelletised carbon black must have been produced by carrying on the activity as defined by clause 611 to be eligible as a relevant product.

18

6.5 White titanium dioxide pigment production

Part 6 Production of white titanium dioxide (TiO2) pigmentDivision 1 Production of white titanium dioxide (TiO2) pigmentClause 614 – Production of white titanium dioxide (TiO2) pigment

This clause provides that the production of white titanium dioxide (TiO2) pigment is the chemical transformation of one or more of the following: rutile, synthetic rutile, ilmenite (FeTiO3), leucoxene, or titanium slag that has an iron (Fe) concentration of greater than or equal to seven per cent to produce white titanium dioxide pigment. The white titanium dioxide pigment must: conform with ASTM classification D476-00, and have an iron concentration of less than or equal to 0.5 per cent.

The production of synthetic rutile (defined for the purposes of data collection) and the production of white titanium dioxide pigment occur within the same production chain. Because of the requirement for white titanium dioxide pigment to have an iron concentration of less than or equal to 0.5 per cent, the activities of the production of synthetic rutile and the production of white titanium dioxide pigment cannot both be conducted to produce the same tonne of output.

The activity as conducted during the period used to assess the eligibility of the activity involved reducing the inputs with carbon and oxidising with chlorine to produce titanium tetrachloride.

The titanium tetrachloride was then distilled, and re-oxidised with oxygen to produce white titanium dioxide pigment while regenerating chlorine for re-use in the process. One producer conducted the activity over two sites.

It is intended that the alternative processes of producing white titanium dioxide pigment through the sulphate process will also fit within the activity description. This process involves digesting ilmenite or ilmenite and titanium slag in sulphuric acid, hydrolysing the titanyl sulphate to produce hydrated titanium dioxide, and heating the solid in a calciner to evaporate the water to produce white titanium dioxide pigment.

The inputs of the activity have been defined to include rutile, synthetic rutile, ilmenite, leucoxene, or titanium slag that has an iron concentration of greater than or equal to seven per cent. Titanium slag is a product that is typically produced from the electro-smelting of ilmenite and typically contains 70 - 85 per cent TiO2 but may contain up to 93 per cent TiO2. It does not display the descriptive characteristics that are set out in ASTM classification D476-00 such as, minimum titanium dioxide content, specific resistance, moisture content, specific gravity, and screen residue. There are no restrictions on the different combinations of these inputs that may be used; however, the inputs must actually be transformed into white titanium dioxide pigment.

The activity does not include the upstream production of rutile, synthetic rutile, ilmenite, titanium slag or leucoxene. As such, the relevant site for the purposes of the exemption is that where the white titanium dioxide pigment is actually produced and does not extend to separate sites which may conduct upstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


19

the direct emissions from, and electricity use of, machinery, equipment and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: - machinery used to move materials within and as part of the activity;- control rooms, laboratories, maintenance workshops;- machinery used to create non-electrical energy for use in the activity;- the processing of by-products where they involve the recovery of materials for re-use

within the activity or are necessary for the activity to proceed as described;- onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations; waste heat recovery within the activity boundary; steam consumed within the activity boundary; and emissions associated with the production of nitrogen and oxygen consumed within the

activity

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are not taken to relate to the activity and must be excluded are those associated with: transportation of inputs used in the activity to storage at the same location as the activity; transportation of the output from the activity from storage at the same location as the

activity; complementary activities, such as packaging, head office, administrative and marketing

operations, either at the same location as the activity or elsewhere; production of rutile, synthetic rutile, ilmenite (FeTiO3), titanium slag or leucoxene; emissions associated with the generation of electricity on the site where the activity is

conducted; and transportation of intermediate products between locations where the activity takes place

over more than one location.


This clause provides that the production of white titanium dioxide pigment is classified as a moderately emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of white titanium dioxide pigment is 0.986 MWh per tonne of saleable white titanium dioxide pigment.

The tonnage of the relevant white titanium dioxide pigment should be measured according to the accepted industry practice for production that conforms to ASTM D476-00, 2005, “Standard Classification for Dry Pigmentary Titanium Dioxide Products”, ASTM International, West Conshohocken, PA, 2005, DOI: 10.1520/D0476-00R05 found at www.astm.org.

To be eligible as a relevant product, the white titanium dioxide pigment must:(a) be produced by carrying on the EITE activity; and(b) conform with ASTM classification D476-00; and(c) have an iron (Fe) concentration of less than or equal to 0.5 per cent; and(d) be of saleable quality.

The white titanium dioxide pigment must have been produced by carrying on the activity as defined by clause 614 to be eligible as a relevant product. For instance, imported white

20

titanium dioxide pigment blended with the product produced from the activity will not be included in the tonnes of the relevant product.

The white titanium dioxide pigment must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of white titanium dioxide pigment which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

21

6.6 Silicon production

Part 7 Production of siliconDivision 1 Production of siliconClause 617 – Production of silicon

This clause provides that the production of silicon (Si) is the chemical transformation of silica (silicon dioxide (SiO2)) to produce silicon with a concentration of silicon equal to or greater than 98 per cent, conducted in accordance with the overall chemical equation:

SiO2(s)+2C(s) → Si(s) +2CO(g)

The activity as conducted during the period involved the reaction of silica with a combination of carbonaceous reducing agents such as wood, charcoal, coke, and coal, in an submerged electric arc furnace at high temperatures by passing an electrical current through carbon electrodes.

It is intended that the production of very high purity silicon (>99.9 per cent pure) fits within the activity description if produced from silica.

The activity description is not satisfied through the undertaking of silicon production that does not have a purity that is equal to or greater than 98 per cent by mass. The activity description is also not satisfied if silicon is further refined, on a stand-alone basis, to produce high purity silicon without commencing the transformation from silica. However, the fact that a particular batch of silicon does not have a purity equal to or greater than 98 per cent, does not mean that the activity is not conducted at other times throughout the year, when the purity is equal to or greater than 98 per cent in other batches.

The inputs of the activity have been defined to include silica which could be presented as the mineral, quartz or the metamorphic rock, quartzite.

The activity does not include the mining, crushing, grinding and milling of silica prior to the smelting process, the production of charcoal, or wood processing. As such, the relevant site for the purpose of the exemption is that where the silicon is actually produced and does not extend to separate sites which may conduct either mining of silica, charcoal production, or wood processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

InclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be included within the activity boundary are: the direct emissions from, and electricity use of, machinery, equipment and processes

which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: o machinery used to move materials within and as part of the activity; o control rooms, laboratories, maintenance workshops; o machinery used to create non-electrical energy for use in the activity; o the processing of by-products where they involve the recovery of materials for re-use

within the activity or are necessary for the activity to proceed as described; o onsite processing of waste materials from the activity to comply with Commonwealth,

State or Territory obligations; waste heat recovery within the activity boundary;

22

steam consumed within the activity boundary; and crushing of silicon in order to produce saleable silicon.



operations, either at the same location as the activity or elsewhere; emissions associated with the generation of electricity on the site where the activity is

conducted; mining, crushing, grinding and milling of silica (silicon dioxide, SiO2) prior to the smelting

process; charcoal production; and wood processing.


This clause provides that the production of silicon is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of silicon is 11.7 MWh per tonne of saleable silicon with a purity equal to or greater than 98 per cent by mass.

The tonnage of the relevant silicon should be measured according to acceptable industry practices.

To be eligible as a relevant product, the silicon must:(a) have a concentration of silicon equal to or greater than 98 per cent by mass; and(b) be produced by carrying on the EITE activity; and(c) be of saleable quality.

The silicon must have been produced by carrying on the activity as defined by clause 617 to be eligible as a relevant product.

The silicon must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of silicon which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable silicon but then that silicon is remelted and recast, their tonnage should be counted only once for the definition of a relevant product.

23

6.7 Zinc smelting

Part 8 Smelting ZincDivision 1 Smelting ZincClause 620 Smelting Zinc

This clause provides that smelting zinc is the physical and chemical transformation of either, or both, concentrated mineralised zinc compounds; and zinc-bearing secondary materials; to produce zinc metal (Zn) with a concentration of zinc equal to or greater than 99.95 per cent.

The activity as conducted during the period utilised pyro-metallurgical and/or hydro-metallurgical processes where concentrated mineralised zinc compounds and zinc bearing secondary materials were extracted and leached to produce a zinc sulphate solution.This solution was then subjected to an electrolytic refining process where the zinc from the electrolyte solution was plated onto a cathode. The zinc cathodes were then stripped and cast in a furnace to produce final saleable zinc metal or alloyed with other metals to produce zinc alloys.

It is intended that alternative processes that produce zinc from concentrated zinc compounds will fit within the activity description. This includes the pyro-metallurgical processes available for producing zinc from concentrate.

The activity description is not satisfied through the undertaking of zinc production where the final product is not zinc metal (Zn) with a concentration of zinc equal to or greater than 99.95 per cent with respect to mass or the undertaking of secondary zinc recovery from scrap.

The inputs of the activity have been defined to include concentrated mineralised zinc compounds and zinc-bearing secondary materials. Zinc bearing secondary materials may include zinc in fume (Zn) with a concentration of zinc equal to or greater than 60 per cent with respect to mass or other zinc bearing material such as zinc oxides.

The activity does not include the mining, concentrating and pre-processing of the concentrated mineralised zinc compounds, the production of zinc bearing secondary materials or the post-cast rolling, extruding, re-forming or alloying of zinc metal. As such, the relevant site for the purposes of the exemption is that where the zinc of the required concentration is actually produced and does not extend to separate sites which may conduct the mining, concentrating and pre-processing of the concentrated mineralised zinc compounds, the production of zinc bearing secondary materials or the post-cast rolling, extruding, re-forming or alloying of zinc metal but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

Inclusions

For the purposes of the formal data assessment, emissions and electricity use which are to be included within the activity boundary are: the direct emissions from, and electricity use of, machinery, equipment and processes

which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;

24

o the processing of by-products where they involve the recovery of materials for re-use within the activity or are necessary for the activity to proceed as described;


waste heat recovery within the activity boundary; steam consumed within the activity boundary; roasting, leaching, purification, electrolytic and casting processes; processing of residues and /or intermediate products in the activity, including, for example,

cadmium cementates (Cd) and zinc dust (Zn); and onsite processing of sulphur compounds to produce sulphuric acid, and effluent treatment

operations.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are not taken to relate to the activity and must be excluded are those associated with: – transportation of inputs used in the activity to storage at the same location as the activity; transportation of the output from the activity from storage at the same location as the



conducted; mining and pre-processing of concentrated mineralised zinc compounds and/or zinc

bearing materials, and other intermediate inputs; processing of other by-products, such as copper sulphate (CuSO4); post-cast rolling, extruding, re-forming or alloying of zinc metal (Zn); and secondary smelting and secondary casting of recycled compounds containing zinc metal

(Zn).

Division 2 Classification of activityClause 621– Classification of activity

This clause provides that smelting of zinc is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the smelting of zinc is 4.25 MWh per tonne of zinc metal with a concentration of zinc equal to or greater than 99.95 per cent.

The tonnage of the relevant zinc should be measured according to measurement techniques in practice in the industry.

To be eligible as a relevant product, the zinc must: have a concentration of zinc equal to or greater than 99.95 per cent; and be produced by carrying on the EITE activity; and be of saleable quality.

Zinc metal must have a concentration of zinc equal to or greater than 99.95 per cent as defined by clause 620 to be eligible as a relevant product. In many circumstances zinc is alloyed with other products during the casting process. If this occurs, the zinc content of the final alloy should be measured on a 99.95 per cent equivalent basis for exemption purposes. Only alloys produced using zinc with a concentration of zinc equal to or greater than 99.95 per cent can be measured in this way.

25

The zinc must have been produced by carrying on the activity as defined by clause 620 to be eligible as a relevant product. Secondary zinc recovered from recycling materials does not qualify for undertaking this activity.

The zinc must be of saleable quality. This is defined by regulation 22C. Zinc which is discarded or reprocessed because it does not meet output specifications is not of saleable quality.

26

6.8 Integrated lead and zinc production

Part 9 Integrated production of lead and zincDivision 1 Integrated production of lead and zincClause 623 – Integrated production of lead and zinc

This clause provides that the integrated production of lead and zinc is the chemical transformation of either or both of: concentrated mineralised lead compounds, with or without additional lead-bearing secondary materials; and concentrated mineralised zinc compounds, with or without additional zinc-bearing secondary materials; to produce: lead metal (Pb) with a concentration of lead equal to or greater than 99.97 per cent; and zinc in fume (Zn) with a concentration of zinc equal to or greater than 60 per cent.

The activity as conducted during the period involved a pyro-metallurgical production process where lead and zinc bearing raw materials were extracted to produce refined lead, zinc in fume (Zn) with a concentration of zinc equal to or greater than 60 per cent with respect to mass and other by-products such as silver, copper and sulphuric acid. The processes used in integrated lead and zinc production were sinter plant, blast furnace and slag fumer.

It is intended that alternative processes to produce lead and zinc in fume will fit within the activity description. However, DCCEE is not aware of any alternative processes undertaken in the base period which produced the same outputs.

The activity description is not satisfied through the undertaking of lead smelting on a stand-alone basis such that the outputs from the activity do not include zinc in fume.

The activity does not include the mining and production of concentrated mineralised lead compounds, production of lead bearing secondary materials and concentration of mineralised zinc compounds, or the production of zinc bearing secondary materials. The activity also does not include the production of zinc metal from zinc in fume, whether this is conducted on the same or a different site to the activity. As such, the relevant site for the purposes of the exemption is that where the lead and zinc are actually produced and does not extend to separate sites which may conduct the mining and production of concentrated mineralised lead compounds, production of lead bearing secondary materials and concentration of mineralised zinc compounds or the production of zinc bearing secondary materials but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where it involves the recovery of materials for re-use

within the activity or is necessary for the activity to proceed as described; ando onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations; production of oxygen consumed within the activity;

27

waste heat recovery within the activity boundary; steam consumed within the activity boundary; sintering, blast furnace, refining, slag fuming, leaching, electrolytic and casting processes,

commonly referred to as pyrometallurgical and hydrometallurgical processes; processing of residues and/or intermediate products in the activity, including the precious

metals refinery; and onsite processing of sulphur compounds to produce sulphuric acid, and effluent treatment

operations.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are:


transportation of the outputs of the activity from storage at the same location as the activity;



mining and production of concentrated mineralised lead compounds and/or lead bearing secondary materials and/or concentrated mineralised zinc compounds and/or zinc bearing secondary materials;

processing and production of other materials and metals other than zinc, lead, gold and silver, such as cadmium (Cd); and

the production of copper cathode from copper matte or dross.


This clause provides that the integrated production of lead and zinc is classified as a moderately emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the integrated production of lead and zinc is 0.355 MWh per tonne of lead metal has a concentration of lead equal to or greater than 99.97 per cent with respect to mass and 0.820 MWh per tonne of zinc in fume that has a concentration of zinc equal to or greater than 60 per cent with respect to mass.

The tonnage of the relevant zinc should be measured according to measurement techniques in practice in the industry.

To be eligible as a relevant product: the lead metal and zinc in fume must be produced by carrying on the EITE activity; and the lead metal must be of saleable quality.

The lead and zinc in fume must have been produced by carrying on the activity as defined by clause 623 to be eligible as relevant products. Further, the production of zinc metal from zinc in fume is part of the related, but distinct, zinc smelting activity and is not part of this activity.

Additionally, the recovery of secondary lead or zinc from recycled material does not qualify for undertaking this activity.

28

The lead metal must be of saleable quality. This is defined by regulation 22C. Lead outputs which are discarded or reprocessed because they do not meet output specifications are not of saleable quality.

29

6.9 Aluminium smelting

Part 10 Aluminium smeltingDivision 1 Aluminium smeltingClause 626 – Aluminium smelting

This clause provides that aluminium smelting is the physical and chemical transformation of alumina (aluminium oxide (Al2O3)) into saleable aluminium metal (Al).

The activity as conducted during the period used to assess the eligibility of the activity involved the Hall Héroult process, where alumina is dissolved in molten cryolite (Na3AlF6), and the solution electrolysed using both a carbon anode and cathode to obtain aluminium metal. In summary the overall chemical equation representing in this transformation is:

2Al2O3(s) + 3C(s) → 4Al(s) + 3CO2(g)

The production of carbon anodes is an ancillary component of this activity. The carbon anodes were manufactured from a mixture of petroleum coke, pitch and tar, and pre-baked in separate anode plants.

It is intended that alternative aluminium smelting processes including alternative electrolytic cell configurations such as an inert anode or drained cathode and alternative process pathways such as carbothermic production of aluminium, will fit within the activity description. It is also intended that the use of pre-baked anodes in the smelting process will fit within the activity description.

The activity description is not satisfied through the undertaking of the remelting and subsequent recasting or reforming of aluminium, recycling of aluminium, and/or rolling of aluminium.

The inputs of the activity have been defined to include any grade of alumina (aluminium oxide,Al2O3).

The output of this activity is saleable aluminium metal which may be in a range of forms including ingots, slab, T-bars or extrusion billets and may contain alloys based on customer specifications.

The activity does not include the production of alumina, cathodes, alloying materials, or the smelting and associated casting of secondary aluminium metal. As such, the relevant site for the purposes of the exemption is that where the aluminium metal is actually produced and does not extend to separate sites which may conduct upstream or downstream processing, but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.



o machinery used to move materials within and as part of the activity;

30

o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where they involve the recovery of materials for



electrolysis, including using a process commonly referred to as the Hall-Héroult Process;

alloying and casting of primary aluminium into saleable aluminium metal; the production of anodes; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.






the production of alumina (aluminium oxide, Al203); the production of cathodes; the production of alloying materials; the smelting and associated casting of secondary aluminium metal (Al); and further downstream processing of aluminium metal (Al) beyond the boundary of this

activity


This clause provides that aluminium smelting is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of aluminium smelting is 15.0 MWh per tonne of primary aluminium with a purity equal to or greater than 98 per cent.

Such measurement of primary aluminium is intended to be weighed after electrolysis but before casting. This is generally done in the potroom.

To be eligible as a relevant product, the primary aluminium must:(a) have a concentration of aluminium equal to or greater than 98 per cent; and(b) be produced as part of carrying on the EITE activity; and(c) be weighed after electrolysis but before casting.

The aluminium must have been produced by carrying on the activity as defined by clause 626 to be eligible as a relevant product. Accordingly, the remelting of imported or recycled aluminium will not be included in the tonnes of relevant product.

31

6.10 High purity ethanol production

Part 11 Production of high purity ethanolDivision 1 Production of high purity ethanolClause 629 – Production of high purity ethanol

This clause provides that the production of high purity ethanol is the chemical transformation of fermentable sugars (such as C6H12O6, C5H10O5, C12H22O11 or C18H32O16) to ethanol (C2H5OH) and subsequent purification process to obtain a solution of high purity ethanol where the concentration of ethanol is equal to or greater than 95 per cent with respect to volume.

The activity as conducted during the period used to assess the eligibility of the activity involved the conversion of fermentable sugars (including fructose, glucose, sucrose, maltotriose, raffinose) derived from sugar cane and wheat feedstocks to high purity ethanol.

It is intended that production of high purity ethanol from fermentable sugars derived from alternative feedstocks such as corn, sugar beets, grapes or cellulosic biomass for the subsequent production of high purity ethanol will fit within the activity description. The inputs of the activity have been defined to include any source of fermentable sugar.

The activity description is not satisfied through the undertaking of the production of ethanol that does not reach a concentration of ethanol that is equal to or greater than 95 per cent with respect to volume.

The activity does not include the upstream processing of the raw material to produce fermentable sugars. As such, the relevant site for the purposes of the exemption is that where the high purity ethanol is actually produced and does not extend to separate sites which may conduct upstream processing but not the activity as described. The activity also does not include any downstream processing of the high purity ethanol to produce blended products including alcohol product, industrial solvent or fuel. Generally, it is expected that where upstream or downstream processes are carried out at separate sites, those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.



o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where it involves the recovery of materials for re-

use within the activity or is necessary for the activity to proceed as described; and


electricity use associated with fermentation; distillation and dehydration; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.

32



transportation of the output of the activity from storage at the same location as the activity;



upstream processing of inputs to the activity, including the production of sugar feed for fermentation;

downstream processing of ethanol, including denaturation and blending; direct emissions associated with fermentation; processing of by-products and waste products not otherwise included; and production of yeast for fermentation.


This clause provides that the production of high purity ethanol is classified as a moderately emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of high purity ethanol is 0.168 MWh per kilolitre of 100 per cent equivalent ethanol.

The tonnes of ethanol should be reported on a 100 per cent equivalent basis, that is the kilolitres of pure ethanol contained within the saleable ethanol reported as the output of the activity.

Where the conversion of tonnes of ethanol is required the density of ethanol (C2H5OH) of 789.24 kg/m3 at 20°C must be used.

Relevant measurement options for the measurement of the concentration of ethanol in the high purity ethanol product are outlined in the Commissioner of Taxation Legislative Determination EXC 2009/2 - Excise (Volume - excisable beverages) Determination 2009 (No. 1), sections 10 to 12.

The high purity ethanol must have been produced by carrying on the activity as defined by clause 629 to be eligible as a relevant product. Accordingly, the ethanol must have been produced to have a concentration of equal to or greater than 95 per cent from the relevant inputs to be included in the tonnes of relevant product.

33

6.11 Magnesia production

Part 12 Production of magnesiaDivision 1 Production of magnesiaClause 632 – Production of magnesia

This clause provides that the production of magnesia is the physical and chemical transformation of magnesite (magnesium carbonate (MgCO3)) into one or more of the following magnesia products:(a) caustic calcined magnesia (CCM) that has a concentration of magnesium oxide (MgO) equal to or greater than 75 per cent, and is burned between 650°C and 1200°C.(b) deadburned magnesia (DBM) that has a concentration of magnesium oxide equal to or greater than 85 per cent, has grain density of 2.85 g/cm3 to 3.45 g/cm3, and is burned between 1300°C and 2200°C.(c) electrofused magnesia (EFM) that has a concentration of magnesium oxide equal to or greater than 90 per cent, has grain density of greater than 3.45 g/cm3, and is fused at temperatures in excess of 2750°C.

The activity as conducted during the period used to assess the eligibility of the activity involved calcining magnesium carbonate in a furnace to produce caustic calcined magnesia. The subsequent production of deadburned magnesia and electrofused magnesia was achieved using kilns and electric arc furnaces respectively.

The inputs of the activity have been defined to include any source of magnesium carbonate. The outputs of the activity are caustic calcined magnesia, deadburned magnesia and/or electrofused magnesia.

The activity does not include the extraction of raw materials or the crushing of raw materials where it is not contiguous with the equipment required to conduct the activity. As such, the relevant site for the purposes of the exemption is that where the magnesia is actually produced and does not extend to separate sites which may conduct either extraction of raw materials, preprocessing of raw materials or distribution of magnesia but not the activity as described.

Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9).

However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: o machinery used to move materials within and as part of the activity;o controls rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where it involves the recovery ofo materials for re-use within the activity or it is necessary for the activity to proceed as

described; and– onsite processing of by-products and waste materials from the activity to comply with Commonwealth, State or Territory obligations.

34

waste heat recovery within the activity boundary; steam consumed within the activity boundary; kiln dust production; and crushing, grinding and preparation of raw materials contiguous with the equipment

required to conduct the transformation as described.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are not taken to relate to the activity and must be excluded are those associated with: transportation of inputs used in the activity to storage at the same location as the activity; transportation of the outputs of the activity from storage at the same location as the



conducted; extraction of raw materials; and crushing of raw materials that are not contiguous with the equipment required to conduct

the transformation as described.


This clause provides that the production of magnesia is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of: caustic calcined magnesia is 0.0757 MWh per tonne of caustic calcined magnesia; deadburned magnesia is 0.202 MWh per tonne of deadburned magnesia; and electrofused magnesia is 2.45 MWh per tonne of electrofused magnesia.

The tonnage of the relevant magnesia should be measured accordingly to ordinary measurement rules applicable in the industry.

To be eligible as a relevant product, magnesia must be: produced by carrying on the EITE activity; and of saleable quality.

The magnesia must have been produced by carrying on the activity as defined by clause 632 to be eligible as a relevant product.

Caustic calcined magnesia may also be produced ‘as part of’ rather than just ‘by’ carrying on the EITE activity. For the purposes of determining the relevant product, caustic calcined magnesia produced for the purposes of being used as an input into the production of deadburned magnesia and electrofused magnesia is to be treated as a product separate to, and in addition to, the deadburned magnesia and electrofused magnesia produced.

The magnesia must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of magnesia which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable magnesia which is then re-calcined, re-deadburned, re-electrofused, their tonnage should be counted only once for the definition of a relevant product. Caustic calcined magnesia produced for the purposes of being

35

used as an input into the production of deadburned magnesia and electrofused magnesia is considered to be of saleable quality where it is in a fit state to be used for that subsequent transformation.

36

6.12 Newsprint manufacturing

Part 13 Manufacture of newsprintDivision 1 Manufacture of newsprintClause 635 – Manufacture of newsprint

This clause provides that the manufacture of newsprint is the physical or chemical transformation of any or all of woodchips, sawdust, wood pulp and recovered paper into rolls of uncoated newsprint that has a grammage range of 30 g/m2 to 80 g/m2, has a moisture content in the range of 6 per cent to 11 per cent and is generally usable for newspaper products through an integrated process.

The activity, as conducted during the period used to assess the eligibility of the activity, involved the conversion of woodchips into a pulp slurry using a thermo mechanical process and the conversion of recovered paper into a pulp slurry through a pulping and deinking process. During the assessment period, semi-dried pulp produced from recovered paper was transported between two sites undertaking the activity. The pulp slurry was then drained, pressed and dried in a paper machine to form rolls of newsprint-quality paper.

It is intended that alternative processes of producing pulp from both wood sources (such as woodchips) or recovered paper is considered to fit within the activity description as long as it was produced for the manufacture of newsprint paper. It is also intended that the production of newsprint from bought-in pulp is considered to fit within the activity description.

The activity description is not satisfied through the production of other paper types for which another activity is more appropriate.

The inputs of the activity have been defined to include woodchips, sawdust, wood pulp and recovered paper

The output of this activity is saleable bulk rolls of newsprint.

The activity does not include the upstream processing of wood chipping or the downstream processing of the bulk rolls of newsprint into other products (e.g. newspapers). As such, the relevant site is that where the bulk rolls of newsprint is actually produced and does not extend to separate sites which may conduct downstream or upstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: o machinery used to move materials within and as part of the activity; o control rooms, laboratories, maintenance workshops; o machinery used to create non-electrical energy for use in the activity; o the processing of by-products where it involves the recovery of materials for re-use

within the activity or it is necessary for the activity to proceed as described; o onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations;

37

o the processing of water and wastewater used in the activity; and o emissions associated with onsite processes of chemical preparation, compressed air

generation and delivery and cooling tower operation. waste heat recovery within the activity boundary; steam consumed within the activity boundary; the production of pulp for use in the activity by the conversion of:

o wood chips and/or sawdust using mechanical refining; or a combination of mechanical refining with heat or chemical treatment; and/or

o recovered paper (including deinking and onsite processing).

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are not taken to relate to the activity and must be excluded are those associated with: transportation of inputs used in the activity to storage at the same location as the activity; transportation of the output of the activity from storage at the same location as the activity; complementary activities, such as packaging, head office, administrative and marketing


conducted; all forestry operations including establishment, maintenance and harvesting; the production of wood chips; the collection, sorting, transport and baling of recovered paper for use in the activity; transportation of pulp and recovered paper between sites conducting the activity; further processing, cutting or colouring of newsprint rolls; and the generation of steam for use outside the activity.


This clause provides that the manufacture of newsprint is classified as a highly emissions-intensive activity.


This clause provides that there are three electricity baselines relevant for the activity of manufacture of newsprint: For the manufacture of uncoated newsprint, the electricity baseline for calculating the

amount of a liable entity’s exemption is 0.697 MWh per air dried tonne of rolls of uncoated newsprint.

For the production of pulp from either or both woodchips and sawdust, the basis for calculating the amount of a liable entity’s exemption is 2.48 MWh per tonne of bone dried equivalent pulp that is used in the integrated process of manufacturing newsprint.

For the production of pulp from recovered paper, the basis for calculating the amount of a liable entity’s exemption is 0.431 MWh per tonne of bone dried equivalent pulp that is used in the integrated process of manufacturing newsprint.

The tonnage for both newsprint and pulp should be measured according to ordinary measurement rules applicable in the industry. The use of the equivalent measurement of pulp recognises that pulp is likely to be in a wet form when measurement takes place (i.e. there is no requirement to produce dry pulp). For this activity pulp production is measured in the wet form based on flow and concentration metering. It is reported on a ‘bone dry’ basis which is a term commonly used in the pulp and paper sector meaning pulp in a moisture-free state (zero per cent moisture).

38

To be eligible as a relevant product for the sub-activity of newsprint manufacturing, newsprint must: have a grammage range of 30 g/m2 to 80 g/m2

have a moisture content in the range of 6 per cent to 11 per cent be generally usable for newspaper products

The newsprint must have been produced by carrying on the activity as defined by clause 635 to be eligible as a relevant product.

The newsprint must be of saleable quality. This is defined by regulation 22C. In particular, any tonnes of newsprint which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable newsprint which is then recycled prior to being sold, this tonnage should be counted only once for the definition of a relevant product.

To be eligible as a relevant product for the sub-activity relating to the production of pulp from woodchips and/or sawdust, the pulp must: be produced from woodchips and/or sawdust be used in the integrated process of manufacturing newsprint and be produced as part of carrying on the EITE activity as defined by regulation 635.

To be eligible as a relevant product for the sub-activity relating to the production of pulp from recovered paper, the pulp must: be produced from recovered paper be used in the integrated process of manufacturing newsprint and be produced as part of carrying on the EITE activity as defined by clause 635.

For all pulp and paper activities, an amount of paper or pulp can only be used to calculate one exemption. For example, pulp produced from recovered paper cannot be counted towards a exemption under both the newsprint and printing and writing paper activities. It also cannot be counted towards an exemption under pulp produced from either or both of woodchips and sawdust for the newsprint activity.

39

6.13 Dry pulp manufacturing

Part 14 Dry pulp manufacturingDivision 1 Dry pulp manufacturingClause 638 – Dry pulp manufacturing

This clause provides that dry pulp manufacturing is the physical or chemical transformation of any or all of wood chips, sawdust, wood pulp and recovered paper into either or both rolls and bales of dry pulp that has a moisture content in the range of 4 per cent to 14 per cent and is generally useable in either or both of paper manufacturing and the production of sanitary products (such as a fluff pulp layer in sanitary products).

The activity as conducted during the period used to assess the eligibility of the activity involved the conversion of woodchips into a pulp slurry using the sulfite process and the subsequent drying to form rolls or bales of pulp of saleable quality.

It is intended that alternative processes to produce dry pulp are considered to fit within the activity description. These include Kraft (sulfate) pulp, thermo mechanical pulp (TMP), chemi-thermomechanical pulp (CTMP) and recovered paper pulp processes.

The activity has two sub-activity baselines defined: dry pulp manufacturing and wet pulp production from woodchips and/or sawdust. The sub-activity baseline of wet pulp production is only applicable where pulp is produced from woodchips and/or sawdust as part of the activity.

The inputs of the activity have been defined to include woodchips, sawdust, wood pulp and recovered paper.

The outputs of this activity are saleable rolls and/or bales of dry pulp that have a moisture content in the range of 4 per cent to 14 per cent by weight and are generally useable in paper manufacturing and/or in the production of sanitary products. It is also possible that dry pulp products which meet this description may be sold and used for other purposes.

The activity does not include the upstream woodchip preparation or the downstream processing of the dry pulp into paper and other products. As such, the relevant site for the purpose of the exemption is that where the output is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.



within the activity or it is necessary for the activity to proceed as described;o onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations;o the processing of water and wastewater used in the activity;

40

o emissions associated with onsite processes of chemical preparation, compressed air generation and delivery and cooling tower operation;

o waste heat recovery within the activity boundary;o steam consumed within the activity boundary; ando the production of pulp for use in the activity from:

wood chips and/or sawdust using any combination of mechanical, heat or chemical processes; and/or

recovered paper (including deinking and onsite processing).

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: – transportation of inputs used in the activity to storage at the same location as the activity; transportation of the output of the activity from storage at the same location as the activity; complementary activities, such as packaging, head office, administrative and marketing


conducted; all forestry operations including establishment, maintenance and harvesting; the production of wood chips; the collection, sorting, transport and baling of recovered paper for use in the activity; transportation of pulp and recovered paper between sites conducting the activity; further processing, cutting or colouring of dry wood pulp rolls; and the generation of steam for use outside the activity.


This clause provides that dry pulp manufacturing is classified as a highly emissions-intensive activity.


This clause provides that the there are two electricity baselines relevant for the activity of dry pulp manufacturing: The electricity baseline for calculating the amount of a liable entity’s exemption in respect

of the dry pulp manufacturing is 0.404 MWh per tonne of either or both of rolls and bales of dry pulp.

For the production of wet pulp from either or both of woodchips and sawdust as part of dry pulp manufacturing, the basis for calculating the amount of a liable entity’s exemption is 0.448 MWh per total air dried tonne (applying a 10 per cent moisture content) of equivalent pulp.

The same wet pulp baseline is applied to the activities of dry pulp manufacturing, printing and writing paper manufacturing, packaging and industrial paper manufacturing, tissue paper manufacturing and cartonboard manufacturing.

The tonnage for both dry pulp and wet pulp should be measured according to ordinary measurement rules applicable in the industry. The use of an equivalent measurement for wet pulp recognises that this product is likely to be in a wet form when measurement takes place (i.e. there is no requirement to produce dry pulp). For this activity wet pulp production is measured in the wet form and reported on an ‘air dried’ basis which is a term commonly used in the pulp and paper sector meaning when the moisture content of the pulp is 10 per cent.

41

To be eligible as a relevant product, for the sub-activity of dry pulp manufacturing, the outputs are rolls and/or bales of dry pulp that have a moisture content in the range of 4 per cent to 14 per cent by weight and are generally useable in paper manufacturing and/or in the production of sanitary products.

The dry pulp must have been produced by carrying on the activity as defined by clause 638 to be eligible as a relevant product.

The dry pulp must be of saleable quality. This is defined by regulation 22C. In particular, any tonnes of dry pulp which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable dry pulp which is then recycled prior to being sold, this tonnage should be counted only once for the definition of a relevant product.

To be eligible as a relevant product for the sub-activity of wet pulp manufacturing, the pulp must: be produced from woodchips and/or sawdust; be used in the integrated process of dry pulp manufacturing; and be produced as part of carrying on the EITE activity as defined by clause 638.

Dry pulp that is bought in or pulp produced from recovered paper is not considered to be a relevant product for the wet pulp sub-activity and therefore is not eligible under this subclause.

For all pulp and paper activities, an amount of paper or pulp can only be used to calculate one exemption. For example, pulp produced from recovered paper cannot be counted towards an exemption under both the dry pulp and printing and writing paper activities.

42

6.14 Cartonboard manufacturing

Part 15 Cartonboard manufacturingDivision 1 Cartonboard manufacturingClause 641 – Cartonboard manufacturing

This clause provides that cartonboard manufacturing is the physical or chemical transformation of any or all of wood chips, sawdust, wood pulp and recovered paper into rolls of cartonboard that have a grammage range of 150 g/m2 to 500 g/m2, a moisture content in the range of 4 per cent to 11 per cent, is coated and is generally useable as cartonboard product such as coated kraft liner, coated multiply and other coated paperboard.

The activity as conducted during the period used to assess the eligibility of the activity involved the conversion of recovered paper into a pulp slurry through a pulping and deinking process.

Some pulp was also produced from woodchips and/or sawdust through the use of a mechanical process. Pulp was also bought in and added to the pulp mixture. The pulp slurry was then drained, pressed and dried in a paper machine to form rolls of cartonboard.

It is intended that alternative processes of producing pulp from both wood sources (such as woodchips) or recovered paper is considered to fit within the activity description as long as it is subsequently used in the manufacture of cartonboard. It is also intended that the production of cartonboard from bought-in pulp is considered to fit within the activity description.

The activity has two sub-activity baselines defined: cartonboard manufacturing and wet pulp production from woodchips and/or sawdust. The sub-activity baseline of wet pulp production is only applicable where pulp is produced from woodchips and/or sawdust as part of the activity.


The outputs of this activity are saleable rolls of cartonboard that have a grammage range of150 g/m2 to 500 g/m2, a moisture content in the range of 4 per cent to 11 per cent, is coated and generally useable as a cartonboard product such as coated kraft liner, coated multiply and other coated paperboard.

The activity does not include the upstream woodchip preparation or the downstream process of converting rolls of cartonboard into final products (e.g. box construction). As such, the relevant site for the purposes of the exemption is that where the output is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.



o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;

43

o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where it involves the recovery of materials for re-

use within the activity or it is necessary for the activity to proceed as described;o onsite processing of by-products and waste materials from the activity to

comply with Commonwealth, State or Territory obligations;o the processing of water and wastewater used in the activity;o emissions associated with onsite processes of chemical preparation,

compressed air generation and delivery and cooling tower operation;o waste heat recovery within the activity boundary;o steam consumed within the activity boundary; ando the production of pulp for use in the activity from:








all forestry operations including establishment, maintenance and harvesting; the production of wood chips; the collection, sorting, transport and baling of recovered paper for use in the activity; transportation of pulp and recovered paper between sites conducting the activity; further processing, cutting or colouring of cartonboard rolls; and the generation of steam for use outside the activity.


This clause provides that cartonboard manufacturing is classified as a highly emissions-intensive activity.


This clause provides that there are two electricity baselines relevant for the activity of cartonboard manufacturing: The electricity baseline for calculating the amount of a liable entity’s exemption in respect

of cartonboard manufacturing is 0.775 MWh per tonne of rolls of cartonboard. For the production of wet pulp from either or both of woodchips and sawdust as part of

cartonboard manufacturing, the basis for calculating the amount of a liable entity’s exemption is 0.448 MWh per total air dried tonne (applying a 10 per cent moisture content) of equivalent pulp.


44

The tonnage for both cartonboard and wet pulp should be measured according to ordinary measurement rules applicable in the industry. The use of an equivalent measurement of pulp recognises that pulp is likely to be in a wet form when measurement takes place (i.e. there is no requirement to produce dry pulp). For this activity pulp production is measured in the wet form and reported on an ‘air dried’ basis which is a term commonly used in the pulp and paper sector meaning when the moisture content of the pulp is 10 per cent.

To be eligible as a relevant product, for the sub-activity of cartonboard manufacturing, the outputs are rolls of cartonboard that has a grammage range of 150 g/m2 to 500 g/m2, a moisture content in the range of 4 per cent to 11 per cent, is coated and is generally useable as cartonboard product such as coated kraft liner, coated multiply and other coated paperboard.

The cartonboard must have been produced by carrying on the activity as defined by clause 641 to be eligible as a relevant product.

The cartonboard must be of saleable quality. This is defined by regulation 22C. In particular, any tonnes of cartonboard which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable cartonboard which is then recycled prior to being sold, this tonnage should be counted only once for the definition of a relevant product.

To be eligible as a relevant product for the sub-activity of wet pulp manufacturing, the pulp must: be produced from woodchips and/or sawdust; be used in the integrated process of cartonboard manufacturing; and be produced as part of carrying on the EITE activity as defined by clause 641.

For all pulp and paper activities, an amount of paper or pulp can only be used to calculate one exemption. For example, pulp produced from woodchips and/or sawdust cannot be counted towards an exemption under both the cartonboard and printing and writing paper activities.

45

6.15 Packaging and industrial paper manufacturing

Part 16 Packaging and industrial paper manufacturingDivision 1 Packaging and industrial paper manufacturingClause 644 – Packaging and industrial paper manufacturing

This clause provides that packaging and industrial paper manufacturing is the physical or chemical transformation of any or all of wood chips, sawdust, wood pulp and recovered paper into rolls of packaging and industrial paper that is produced from wholly or partially unbleached input fibre, have a grammage range of 30 g/m2 to 500 g/m2, a moisture content in the range of 4 per cent to 11 per cent, is uncoated and is generally useable as a packaging or industrial paper, including products such as kraft liner, recycled or multiply liner, medium, sack and bag paper, wrapping paper, plasterboard liner, horticultural paper and building paper.

The activity as conducted during the period used to assess the eligibility of the activity involved the conversion of recovered paper into a pulp slurry through a pulping and deinking process and/or the conversion of woodchips into a pulp slurry using the Kraft or sulfite processes. The pulp slurry was then drained, pressed and dried in a paper machine to form rolls of packaging and industrial paper.

It is intended that alternative processes of producing pulp from both wood sources (such as woodchips) or recovered paper is considered to fit within the activity description as long as it is subsequently used in the manufacture of packaging and industrial paper. It is also intended that the production of packaging and industrial paper from bought-in pulp is considered to fit within the activity description.

The activity has two sub-activity baselines defined: packaging and industrial paper manufacturing and wet pulp production from woodchips and/or sawdust. The sub-activity baseline of wet pulp production is only applicable where pulp is produced from woodchips and/or sawdust as part of the activity.


The outputs of this activity are saleable rolls of packaging and industrial paper that are produced from wholly or partially unbleached input fibre, have a grammage range of 30 g/m2 to 500 g/m2, a moisture content in the range of 4 per cent to 11 per cent, is uncoated and is generally useable as a packaging or industrial paper, including products such as kraft liner, recycled or multiply liner, medium, sack and bag paper, wrapping paper, plasterboard liner, horticultural paper and building paper.

The activity does not include the upstream woodchip preparation or the downstream process of converting rolls of packaging and industrial paper into final products (e.g. box construction). As such, the relevant site for the purposes of the exemption is that where the output is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


46

the direct emissions from, and electricity use of, machinery, equipment and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where it involves the recovery of materials for re-use


Commonwealth, State or Territory obligations;o the processing of water and wastewater used in the activity;o emissions associated with onsite processes of chemical preparation, compressed air

generation and delivery and cooling tower operation;o waste heat recovery within the activity boundary;o steam consumed within the activity boundary; ando the production of pulp for use in the activity from:



ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: transportation of inputs used in the activity to storage at the same location as the activity; transportation of the output of the activity from storage at the same location as the activity; complementary activities, such as packaging, head office, administrative and marketing


conducted; all forestry operations including establishment, maintenance and harvesting; the production of wood chips; the collection, sorting, transport and baling of recovered paper for use in the activity; transportation of pulp and recovered paper between sites conducting the activity; further processing, cutting or colouring of packaging paper rolls; and the generation of steam for use outside the activity.


This clause provides that packaging and industrial paper manufacturing is classified as a highly emissions-intensive activity.


This clause provides that there are two electricity baselines relevant for the activity of packaging and industrial paper manufacturing: The electricity baseline for calculating the amount of a liable entity’s exemption in respect

of the packaging and industrial paper manufacturing is 0.554 MWh per tonne of rolls of packaging and industrial paper.

For the production of wet pulp from either or both of woodchips and sawdust as part of packaging and industrial paper manufacturing, the basis for calculating the amount of a liable entity’s exemption is 0.448 MWh per total air dried tonne (applying a 10 per cent moisture content) of equivalent pulp.

47


The tonnage for both packaging and industrial paper and wet pulp should be measured according to ordinary measurement rules applicable in the industry. The use of an equivalent measurement of pulp recognises that pulp is likely to be in a wet form when measurement takes place (i.e. there is no requirement to produce dry pulp). For this activity pulp production is measured in the wet form and reported on an ‘air dried’ basis which is a term commonly used in the pulp and paper sector meaning when the moisture content of the pulp is 10 per cent.

To be eligible as a relevant product, for the sub-activity of packaging and industrial paper, the outputs are rolls of packaging and industrial paper that are produced from wholly or partiallyunbleached input fibre, have a grammage range of 30 g/m2 to 500 g/m2, a moisture content in the range of 4 per cent to 11 per cent, are uncoated and generally useable as packaging or industrial paper, including products such as kraft liner, recycled or multiply liner, medium, sack and bag paper, wrapping paper, plasterboard liner, horticultural paper and building paper.

The packaging and industrial paper must have been produced by carrying on the activity as defined by clause 644 to be eligible as a relevant product.

The packaging and industrial paper must be of saleable quality. This is defined by regulation 22C. In particular, tonnes of packaging and industrial paper which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable packaging and industrial paper which is then recycled prior to being sold, this tonnage should be counted only once for the definition of a relevant product.

To be eligible as a relevant product for the sub-activity of wet pulp manufacturing, the pulp must: be produced from woodchips and/or sawdust; be used in the integrated process of packaging and industrial paper manufacturing; and be produced as part of carrying on the EITE activity as defined by clause 644.

For all pulp and paper activities, an amount of paper or pulp can only be used to calculate one exemption. For example, pulp produced from woodchips and/or sawdust cannot be counted towards an exemption under both the packaging and industrial paper and printing and writing paper activities.

48

6.16 Printing and writing paper manufacturing

Part 17 Printing and writing paper manufacturingDivision 1 Printing and writing paper manufacturingClause 647 – Printing and writing paper manufacturing

This clause provides that printing and writing paper manufacturing is the physical or chemical transformation of any or all of woodchips, sawdust, wood pulp and recovered paper into rolls of coated or uncoated printing and writing paper that is produced from 100 per cent bleached or brightened input fibre, have a grammage range of 42 g/m2 to 350 g/m2, a moisture content in the range of 4 per cent to 11 per cent and is generally useable as a printing and writing paper product, including products such as offset paper, copy paper, laser printing paper, magazine paper, filing card paper, manilla, book printing paper, envelope paper, forms paper, scholastic paper, cheque paper and security paper.

The activity as conducted during the period used to assess the eligibility of the activity involved the conversion of woodchips into a pulp slurry using a number of different processes (including Kraft, sulfite and mechanical pulp processes). Other sources of pulp were also bought in and added to the process. The pulp slurry was then drained, pressed and dried in a paper machine to form rolls of printing and writing paper.

It is intended that alternative processes of producing pulp from both wood sources (such as woodchips) or recovered paper is considered to fit within the activity description as long as it is subsequently used in for the manufacture of printing and writing paper. It is also intended that the production of printing and writing paper from bought-in pulp is considered to fit within the activity description.

The activity has two sub-activity baselines defined: printing and writing paper manufacturing and wet pulp production from woodchips and/or sawdust. The sub-activity baseline of wet pulp production is only applicable where pulp is produced from woodchips and/or sawdust as part of the activity.


The outputs of this activity are saleable rolls of coated or uncoated printing and writing paper that are produced from 100 per cent bleached or brightened input fibre, have a grammage range of 42 g/m2 to 350 g/m2, a moisture content in the range of 4 per cent to 11 per cent and are generally useable as printing and writing paper products, including products such as offset paper, copy paper, laser printing paper, magazine paper, filing card paper, manilla, book printing paper, envelope paper, forms paper, scholastic paper, cheque paper and security paper.

The activity does not include the upstream woodchip preparation or the downstream process of converting rolls of printing and writing paper into final products (e.g. office paper). As such, the relevant site for the purposes of the exemption is that where the output is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

49




Commonwealth, State or Territory obligations;o the processing of water and wastewater used in the activity;o emissions associated with onsite processes of chemical preparation, compressed air






conducted; all forestry operations including establishment, maintenance and harvesting; the production of wood chips; the collection, sorting, transport and baling of recovered paper for use in the activity; transportation of pulp and recovered paper between sites conducting the activity; further processing, cutting or colouring of printing paper rolls; and the generation of steam for use outside the activity.


This clause provides that printing and writing paper manufacturing is classified as a highly emissions-intensive activity.


This clause provides that there are two electricity baselines that are relevant for the activity of printing and writing paper manufacturing: The electricity baseline for calculating the amount of a liable entity’s exemption in respect

of the printing and writing paper manufacturing is 0.880 MWh per tonne of rolls of printing and writing paper.

50

For the production of wet pulp from either or both of woodchips and sawdust as part of printing and writing paper manufacturing, the basis for calculating the amount of a liable entity’s exemption is 0.448 MWh per total air dried tonne (applying a 10 per cent moisture content) of equivalent pulp.

For the production of pulp from recovered paper that is used in the process of manufacturing printing and writing paper manufacturing, the basis for calculating the amount of a liable entity’s exemption is 0.824 MWh per total air dried tonne (assuming a 10 per cent moisture content) of equivalent pulp from recovered paper.


The tonnage for both printing and writing paper and wet pulp, and pulp from recovered paper, should be measured according to ordinary measurement rules applicable in the industry. The use of an equivalent measurement of pulp recognises that pulp is likely to be in a wet form when measurement takes place (i.e. there is no requirement to produce dry pulp). For this activity pulp production is measured in the wet form and reported on an ‘air dried’ basis which is a term commonly used in the pulp and paper sector meaning when the moisture content of the pulp is 10 per cent.

To be eligible as a relevant product, for the sub-activity of printing and writing paper, the outputs are rolls of coated or uncoated printing and writing paper that are produced from100 per cent bleached or brightened input fibre, have a grammage range of 42 g/m2 to 350 g/m2, a moisture content in the range of 4 per cent to 11 per cent and generally useable as a printing and writing paper product, including products such as offset paper, copy paper, laser printing paper, magazine paper, filing card paper, manilla, book printing paper, envelope paper, forms paper, scholastic paper, cheque paper and security paper.

The printing and writing paper must have been produced by carrying on the activity as defined by clause 647 to be eligible as a relevant product.

The printing and writing paper must be of saleable quality. This is defined by regulation 22C. In particular, any tonnes of printing and writing paper which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable printing and writing paper which is then recycled prior to being sold, this tonnage should be counted only once for the definition of a relevant product.

51

6.17 Alumina refining

Part 18 Alumina refiningDivision 1 Alumina refiningClause 650 – Alumina refining

This clause provides that alumina refining is the physical and chemical transformation of bauxite (which is an ore containing mineralised aluminium compounds) into alumina (aluminium oxide (Al2O3)) with a concentration of aluminium oxide equal to or greater than 95 per cent.

The activity, as conducted during the period used to assess the eligibility of the activity, involved the Bayer process where bauxite is digested with a hot solution of caustic soda (NaOH) to dissolve the alumina content of the bauxite. The solution is further clarified by filtration where the insoluble particles are removed. The alumina is precipitated out from the caustic soda solution and is calcined to produce dry alumina. Emissions associated with the production of specialty aluminas and hydrate (alumina trihydrate, Al(OH)3) were also considered part of this activity. It is intended that both high temperature and low temperature alumina refining processes fit within the activity description.

The activity description is not satisfied through the calcination of uncalcined alumina, specialty aluminas, or hydrate to produce alumina with purity equal to or greater than 95 per cent without commencing the transformation from bauxite. However, the fact that a batch of alumina does not have purity equal to or greater than 95 per cent does not mean that the activity is not conducted at times when the purity is equal to or greater than 95 per cent in other batches. The activity may also be conducted across multiple sites; such as, where bauxite is transformed to uncalcined alumina at one site and transported to another site for calcining to produce saleable alumina a purity equal to or greater than 95 per cent.

The inputs of the activity have been defined to include any grade of bauxite.

The output of the activity is saleable alumina (aluminium oxide, Al2O3) with purity equal to or greater than 95 per cent.

The activity does not include the upstream extraction and pre-processing of bauxite ore and the production of feedstocks such as lime and caustic soda; or the downstream production of aluminium metal. As such, the relevant site for the application is that where the alumina is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the emissions-intensive trade-exposed activity for the purposes of subregulation 22A(9).


the direct emissions from, and electricity use of, machinery, equipment and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including the production of specialty aluminas and hydrate (alumina trihydrate, Al(OH)3), for example: - machinery used to move materials within and as part of the activity; - control rooms, laboratories, maintenance workshops; - machinery used to create non-electrical energy for use in the activity; - the processing of by-products where it involves the recovery of materials for re-use

within the activity or is necessary for the activity to proceed as described; and

52

- onsite processing of waste materials from the activity to comply with Commonwealth, State or Territory obligations;

wet grinding, digestion, clarification, precipitation and calcination, including using a process commonly referred to as the ‘Bayer Process’;

any bauxite residue processing which involves caustic liquor recovery for reuse in the activity;



transportation of inputs used in the activity to storage at the same location as the activity; transportation of the output of the activity from storage at the same location as the activity; complementary activities, such as packaging, head office, administrative and marketing


conducted; extraction (eg. mining) and pre-processing (eg. crushing) of bauxite prior to wet grinding,

including washing and crushing at the bauxite mine; production of lime (calcium oxide compounds); and production of feedstock caustic soda (sodium hydroxide, NaOH) besides that which is

generated or recovered in the activity.

Division 2 Classification of activityClause 651 Classification of activity

This clause provides that alumina refining is classified as a highly emissions-intensive activity.

Division 3 Electricity baseline for calculating partial exemptionClause 652 Electricity baseline for product

This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of alumina refining is 0.228 MWh per tonne of saleable alumina (aluminium oxide, Al203) with purity equal to or greater than 95 per cent by mass.

The tonnage of the relevant alumina should be measured accordingly to ordinary measurement rules applicable in the industry.

To be eligible as a relevant product, the alumina (aluminium oxide, Al203) must: (a) have a concentration of aluminium oxide equal to or greater than 95 per cent; and (b) be produced by carrying on the emissions-intensive trade-exposed activity; and (c) be of saleable quality.

The alumina must have been produced by carrying on the activity as defined by clause 650 to be eligible as a relevant product. For instance, imported alumina blended with the product produced from the activity would not be included in the tonnes of the relevant product.The alumina must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of alumina which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable alumina with purity equal to or greater than 95 per cent, but that alumina is further calcined, the tonnage should be counted only once for the definition of relevant product.

53

6.18 Tissue paper manufacturing

Part 19 Tissue paper manufacturingDivision 1 Tissue paper manufacturingClause 653 – Tissue paper manufacturing

This clause provides that tissue paper manufacturing is the physical or chemical transformation of wood chips, sawdust, wood pulp and/or recovered paper into rolls of uncoated tissue paper where the product has a grammage range of 13g/m2 – 75g/m2, a moisture content in the range of 4 per cent to 11 per cent by mass and which is generally useable in sanitary products such as facial tissue, paper towel, bathroom tissue and napkins.

The activity as conducted during the period used to assess the eligibility of the activity involved the conversion of woodchips into a pulp slurry using the sulfite process, the conversion of recovered paper into a pulp slurry through a pulping and deinking process and the rehydrating of pulp into a pulp slurry. The pulp slurry was then drained, pressed and dried in a paper machine to form rolls of tissue paper.

It is intended that alternative processes of producing pulp from wood sources (such as woodchips) or recovered paper would be considered to fit within the activity description provided it is subsequently used in the manufacture of tissue paper. It is also intended that the production of tissue paper from bought-in pulp is considered to fit within the activity description.

The activity has two sub-activity baselines defined: tissue paper production and wet pulp production from woodchips and/or sawdust. The sub-activity baseline of wet pulp production is only applicable where pulp is produced from woodchips and/or sawdust as part of the activity.


The output of this activity is saleable rolls of uncoated tissue paper where the product has agrammage range of 13g/m2 – 75g/m2, a moisture content in the range of 4 to 11 per cent by mass and which is generally useable as a tissue paper product such as facial tissue, paper towel, bathroom tissue and napkins.

The activity does not include upstream woodchip preparation or the downstream process of converting rolls of tissue paper into final products (e.g. boxes of tissue). As such, the relevant site for the purpose of the application is that where the output is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites will not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example: o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;

54

o the processing of by-products where it involves the recovery of materials for re-use within the activity or it is necessary for the activity to proceed as described;


o the processing of water and wastewater used in the activity;o emissions associated with onsite processes of chemical preparation, compressed air









all forestry operations including establishment, maintenance and harvesting; the production of wood chips; the collection, sorting, transport and baling of recovered paper for use in the activity; transportation of pulp and recovered paper between sites conducting the activity; further processing, cutting or colouring of tissue paper rolls; and the generation of steam for use outside the activity.


This clause provides that tissue paper manufacturing is classified as a moderately emissions-intensive activity.


This clause provides that there are two electricity baselines relevant for the activity of tissue paper manufacturing:

o The electricity baseline for calculating the amount of a liable entity’s exemption in respect of tissue paper manufacturing is 1.70 MWh per tonne of rolls of tissue paper.

o For the production of wet pulp from either or both of woodchips and sawdust as part of dry pulp manufacturing, the basis for calculating the amount of a liable entity’s exemption is 0.448 MWh per air dried tonne (applying a 10 per cent moisture content) of equivalent pulp.

The same wet pulp baseline is applied to the activities of dry pulp manufacturing, printing and writing paper manufacturing, packaging and industrial paper manufacturing, and cartonboard manufacturing.

55

The tonnage for both tissue paper and wet pulp should be measured according to ordinary measurement rules applicable in the industry. The use of an equivalent measurement for wet pulp recognises that this product is likely to be in a wet form when measurement takes place (i.e. there is no requirement to produce dry pulp). For this activity pulp production is measured in the wet form and reported on an ‘air dried’ basis which is a term commonly used in the pulp and paper sector meaning when the moisture content of the pulp is 10 per cent.

To be eligible as a relevant product, for the sub-activity of tissue paper manufacturing, the outputs are saleable rolls of uncoated tissue paper where the product has a grammage range of 13g/m2 – 75g/m2, a moisture content in the range of 4 per cent to 11 per cent by mass and which is generally useable as a tissue paper product such as facial tissue, paper towel, bathroom tissue and napkins.

The tissue paper must have been produced by carrying on the activity as defined by clause 653 to be eligible as a relevant product.

The tissue paper must be of saleable quality. This is defined by regulation 22C. In particular, any tonnes of tissue paper which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable tissue paper which is then recycled prior to being sold, this tonnage should be counted only once for the definition of a relevant product.

To be eligible as a relevant product for the sub-activity of wet pulp manufacturing, the pulp must: be produced from woodchips and/or sawdust; be used in the integrated process of tissue paper manufacturing; and be produced as part of carrying on the EITE activity as defined by clause 653.

For all pulp and paper activities, an amount of paper or pulp can only be used to calculate one exemption. For example, pulp produced from woodchips and/or sawdust cannot be counted towards an exemption under both the tissue paper and printing and writing paper activities.

56

6.19 Integrated iron and steel manufacturing

Part 20 Integrated iron and steel manufacturingDivision 1 Integrated iron and steel manufacturingClause 656 – Integrated iron and steel manufacturing

This clause provides that integrated iron and steel manufacturing is the chemical and physical transformation of iron ore into crude carbon steel products and hot-rolled carbon steel products involving all of the following processes:(a) the chemical and physical transformation of iron ore into agglomerated iron ore, such as iron ore sinter or iron ore pellets;(b) the carbonisation of coal (principally coking coal) into coke oven coke;(c) the chemical and physical transformation of either or both of limestone or dolomite, into lime (including burnt lime and burnt dolomite);(d) the chemical and physical transformation of iron ore feed, including agglomerated iron ore, into molten iron which includes the reduction of oxides of iron using carbon as the predominant reducing agent;(e) the chemical and physical transformation of molten iron and cold ferrous feed, such as pig iron, flat iron and ferrous scrap, into one or more of the following:

(i) continuously cast carbon steel products;(ii) ingots of carbon steel;(iii) hot-rolled carbon steel products, which commenced hot-rolling at a temperature above 800°C.

Note Carbon steel and coke oven coke are defined in regulation 22A.

The activity as conducted during the period used to assess the eligibility of the activity involved the production of coke oven coke, lime (including burnt lime and dolomite), iron ore sinter or iron ore pellets all at a single site, which were used as feedstocks to produce molten iron in a blast furnace.

Molten iron was subsequently used to produce liquid steel in a basic oxygen steelmaking (BOS) plant and the steel was then cast, with the majority of cast steel hot rolled into long or flat products.

The majority of waste gases from the coke ovens and the blast furnace were reticulated and combusted for the purposes of providing energy across the site.

The activity description is not satisfied unless each of the processes in paragraphs 656(1)(a) through to (e) are undertaken. It is the intention that the processes in the activity description are carried out in an integrated manner in accordance with how the activity was conducted during the period used to assess the eligibility. However, it is not necessary that all processes must be carried out at the same site to satisfy the activity description. For example subregulation 22A(9) provides that multiple sites carrying on an activity may constitute an activity group. This provision also needs to be read in the context of subclause 656(2), which sets out that hot-rolled carbon steel products produced at a site may also be considered within the activity where these same products were first produced into continuously cast carbon steel at a different site conducting either the integrated iron and steel manufacturing activity or from the manufacture of carbon steel from cold ferrous feed activity.

It is not intended that it is necessary to produce both iron ore sinter and iron ore pellets to be considered carrying on the activity (i.e. only one form of agglomerated iron ore is required).

It is also not intended that it is necessary to produce either or both long and flat hot-rolled carbon steel to be considered carrying on the activity provided that continuously cast carbon steel products or ingots of carbon steel are produced. Proposed subparagraph 656(1)(e)(iii)

57

sets out that hot-rolled carbon steel products may be produced from molten iron and cold ferrous feed in the integrated iron and steel manufacturing activity. For the avoidance of doubt, this chemical and physical transformation typically proceeds via the intermediate production of continuously cast carbon steel products as the first step, and the second step then proceeds with the physical transformation of continuously cast carbon steel products into hot-rolled carbon steel products. These two intermediate production steps may proceed either at the same site or at different sites.

The activity description is only satisfied where the cold ferrous feed used in the integrated iron and steel manufacturing activity comprises no more than 30 per cent of the total combined mass of molten iron and cold ferrous feed used in the integrated iron and steel manufacturing activity at a site (paragraph 656(3)(a)) or the total combined mass of molten iron and cold ferrous feed used in the integrated iron and steel manufacturing activity at the sites that are part of an activity group (paragraph 656(3)(b)) to produce products of carbon steel over the relevant financial year (the ’30 per cent test’). For a standard application (including significant expansions) the tests outlined in paragraphs 656(3)(a) and 656(3)(b) are in relation to the financial year which ended 6 months before the application year. Thus, for a 2011 application, the 30 per cent test would need to be satisfied with respect to the period from 1 July 2009 to 30 June 2010.

Proposed paragraph 656(3)(c) provides for circumstances where, because an application may be made prior to the year for which the exemption will apply, it is not possible for a new entrant site to prove that the activity has been conducted over the full relevant financial year given that more than half of that year is in the future. Accordingly, for a new entrant integrated iron and steel manufacturer, the test as outlined is that it is likely that cold ferrous feed comprises no more than 30 per cent of the total combined mass of molten iron and cold ferrous feed likely to be used at a site to produce products of carbon steel over the relevant financial year.

If these tests in subclause 656(3) are not met, the activity is not carried out and no exemption certificate may be issued in respect of the relevant application year. The following year the applicant would be eligible to come back as a new entrant site and would be allocated on the basis of 'new and expected additional production.

The inputs of the activity have been defined to include iron ore, coal (principally coking coal), either or both limestone or dolomite and cold ferrous feed, such as pig iron, flat iron and ferrous scrap.

The outputs of this activity are agglomerated iron ore, such as iron ore sinter or iron ore pellets, coke oven coke, lime, continuously cast carbon steel products, ingots of carbon steel and hot-rolled carbon steel products which commenced hot rolling at temperatures in excess of 800 °C. Products such as, but not limited to, iron ore pellets, coke oven coke, lime, pig iron or flat iron produced via the carrying on of the activity are not to be considered relevant products for any other EITE activity. Carbon steel and coke oven coke are defined in regulation 22A.

The activity does not include the upstream processes such as extraction, concentrating, crushing or screening of iron ore, or the mining of coal, limestone or dolomite. The activity does not include cold ferrous feed that is not mixed with molten iron before being subsequently transformed into carbon steel products as in the EITE activity of manufacture of carbon steel from cold ferrous feed nor does it include the manufacture of pig iron which is subsequently sold from the activity boundary without undergoing the transformation into continuously cast steel or steel ingots. The activity does not include downstream processes such as finishing processes, including, but not limited to, cold-rolling, annealing, pickling or coating of carbon steel products. As such, the relevant site for the application is that where the outputs are actually produced and does not extend to separate sites which may conduct extraction, concentrating, crushing or screening of iron ore, the mining of coal, limestone or dolomite,

58

cold-rolling, annealing, pickling or coating of carbon steel products but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

The tonnes of all relevant products reported as produced by this activity must not be used to claim allocations for any other EITE activity including the manufacture of carbon steel from cold ferrous feed.


o the direct emissions from, and electricity use of, machinery, equipment and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example:



o onsite processing of waste materials and by-products from the activity to comply with Commonwealth, State or Territory obligations;

o waste heat recovery within the activity boundary;o steam consumed within the activity boundary;o the production of cryogenic gases e.g. oxygen, nitrogen and argon that are consumed

in the activity;o the conduct of secondary metallurgical treatment;o casting via the continuous casting process or ingot casting process into intermediate

steel products;o the processing of cold ferrous feed where that process is conducted on site;o the treatment of indigenous waste gases, e.g. coke oven gas, blast furnace gas and

basic oxygen steelmaking off-gas;o steel scrap receival (including quality checks and storage);o warehousing or storage of activity outputs, raw materials and consumables used by the

activity where this is at the same location as the activity;o water and waste treatment (including gases) necessary for the activity to be

conducted; ando the hot rolling of the crude carbon steel which is produced in the integrated iron and

steel activity.


o transportation of the outputs from the activity from storage at the same location as the activity;

o complementary activities, such as packaging, head office, administrative and marketing operations, either at the same location as the activity or elsewhere;

o electricity generation on the site where the activity is conducted5;o transportation of intermediate products between separate site locations conducting the

activity;

59

o the extraction and concentration of raw materials prior to the conduct of the activity, including iron ore crushing and screening; and

o any finishing processes, including, but not limited to, cold-rolling, annealing, pickling or coating of steel products.

Division 2 Classification of activityClause 657 – Classification of activityThis clause provides that integrated iron and steel manufacturing is classified as a highly emissions-intensive activity.


This clause provides the electricity baselines for calculating the amount of a liable entity’s exemption in respect of integrated iron and steel manufacturing are:

o for iron ore sinter, the baseline is 0.0397 MWh per tonne of iron ore sinter on a dry weight basis that meets the necessary requirements for use in the integrated iron and steel manufacturing process and is produced as part of carrying on the EITE activity;

o for iron ore pellets, the baseline is 0.0742 MWh per tonne of iron ore pellets on a dry weight basis that meet the necessary requirements for use in the integrated iron and steel manufacturing process and is produced as part of carrying on the EITE activity;

o for coke oven coke, the baseline is 0.0397 MWh per tonne of coke oven coke on a dry weight basis that is produced as part of carrying on EITE activity;

o for lime, the baseline is 0.0405 MWh per tonne of lime on a dry weight basis that meets the necessary requirements for use in the integrated iron and steel manufacturing process and is produced as part of carrying on the EITE activity;

o for continuously cast carbon steel products and ingots of carbon steel, the baseline is 0.145 MWh per tonne of either or both of saleable continuously cast carbon steel products and saleable ingots of carbon steel that is produced as part of carrying on the EITE activity and is not a relevant product for the activity of the manufacture of carbon steel from cold ferrous feed;

o for hot-rolled carbon steel products which are long products, the baseline is 0.133 MWh per tonne of saleable long products of hot-rolled carbon steel that is in coils or straight lengths, is generally produced in rod, bar and structural (section) mills and has a cross sectional shape such as I, T, Y, U, V, H, C, L, square, rectangular, round, flat, hexagonal, angle, channel, structural beam profile or rail profile; and

o for hot-rolled carbon steel products which are flat products, the baseline is 0.116 MWh per tonne of saleable flat products of hot-rolled carbon steel that is flat in profile, such as plate and hot rolled coil, is generally produced in hot strip and plate mills, is generally greater than 600 mm in width and is generally less than 150 mm in thickness.

The relevant tonnes of iron ore sinter, iron ore pellets, coke oven coke and lime must be expressed on a dry weight basis. A dry weight estimate for the tonnes of these products is assumed to be represented by a measurement of the product ‘as produced’ (i.e. the tonnes produced immediately leaving the plant, kiln or oven, such that all moisture is assumed to have been driven off). The tonnes of relevant product on a dry weight basis may also be demonstrated in accordance with other ordinary measurement rules applicable in the industry. The iron ore sinter, iron ore pellets and lime may be relevant products even if they are not directly used in the iron and steel making process as long as it can be demonstrated they meet the necessary requirements for use in the integrated iron and steel manufacturing process.

To be eligible as a relevant product, carbon steel products listed at subclauses 658(5) through to must accord with the definition of carbon steel in regulation 22A, as containing, by mass, more iron (Fe) than any other single element and have a carbon (C) concentration of less than 2 per cent. Relevant standards for measuring the carbon (C) concentration in carbon steel

60

include AS3641.1-1999Recommended Practice for Atomic emission Spectrometric Analysis, Part 1: Principles and Techniques and AS/NZS 1050.1:1996 Methods for the Analysis of Iron and Steel, Part 1: Sampling Iron and Steel for Chemical Analysis.

To be eligible as a relevant product, such as iron ore sinter or iron ore pellets, coke oven coke, lime, continuously cast carbon steel products and ingots of carbon steel must have been produced by carrying on the activity as defined by the relevant paragraphs of 656(1)(a) through to (e) and subject to the conditions outlined in subclause 656(3). While it is typical for the majority of the relevant product of continuously cast carbon steel products to be used as a feedstock to produce another relevant product (i.e. products of hot-rolled carbon steel), it is not necessary for the total output of continuously cast carbon steel product to be hot rolled within the activity boundary. In particular, continuously cast carbon steel which is then transformed into hot-rolled product may be both a relevant product as continuously cast carbon steel and as hot-rolled carbon steel.

As per proposed paragraphs 658(6)(d) through to (g), 658(7)(e) through to (h) and proposed subclause 658(8), to be eligible as relevant products, hot-rolled carbon steel which are flat or long products, produced from continuously cast carbon steel products must either:

o be produced through the carrying on of the activity as defined by relevant paragraphs of 656(1)(a) through to (e) to be eligible as a relevant product (whether at a single site or multiple sites through an activity group); and/or

o be produced through the carrying on of the activity as set out in subclause 656(2) from continuously cast carbon steel products produced through carrying on the activity as defined by relevant paragraphs of 656(1)(a) through to (e) at another site carrying on the integrated iron and steel activity which is outside of the activity group of the activity the subject of the application; and/or

o be produced from the carrying on of the activity as set out in subclause 656(2) from continuously cast carbon steel products produced through the activity of the manufacture of carbon steel from cold ferrous feed.

For example, the integrated iron and steel activity may involve two sites within an activity group, site 1 and site 2 (the first activity group): site 1 may produce continuously cast steel products and some hot-rolled products and site 2 may conduct the hot rolling of the remaining continuously cast carbon steel produced by site 1. If site 2 also hot rolls continuously cast carbon steel sourced from site 3, which conducts the activity of integrated iron and steel manufacturing or site 4, which conducts the activity of manufacture of carbon steel from cold ferrous feed, the tonnes of hot-rolled product relating to that sourced from site 3 or site 4 may be considered as part of the first activity group providing they were not included as hot rolled tonnes in any applications for EITE exemption considered in relation to sites 3 and 4.

It is also important to note where multiple sites form an activity group, all relevant products produced as part of that activity across those sites must be referred to each site in the activity group in accordance with the rules in regulation 22B. This is the case even where some products (such as sinter, pellets, lime and coke oven coke, continuously cast carbon steel products) are only produced at one of the sites.

It should also be noted that the definitions of long and flat products use the word 'generally' in a number of places to accommodate the possibility of limited exceptions to these requirements being met for every tonne of hot-rolled product where the majority of the hot-rolled product does meet the requirement. However, a tonne of hot-rolled product cannot be both a flat and a long product.

The tonnes of continuously cast carbon steel products, long product hot-rolled carbon steel and flat product hot-rolled carbon steel must be of saleable quality. Therefore, tonnes that are scrapped, recycled, remelted, lost or discarded are not to be included in the tonnes of relevant product.

61

6.20 Carbon steel from cold ferrous feed

Part 21 Manufacture of carbon steel from cold ferrous feed Division 1 Manufacture of carbon steel from cold ferrous feedClause 659 – Manufacture of carbon steel from cold ferrous feed

This clause provides that manufacture of carbon steel from cold ferrous feed is the physical and chemical transformation of cold ferrous feed (such as ferrous scrap, pig iron and flat iron) by heating and melting into liquid steel and the subsequent casting of the liquid steel to produce one or more of the following:(a) continuously cast carbon steel products;(b) ingots of carbon steel;(c) hot-rolled carbon steel products, which commenced hot-rolling over 800°C.

The activity as conducted during the period used to assess the eligibility of the activity involved the heating and melting of cold ferrous feed such as recycled scrap steel and iron into liquid steel in an electric arc furnace. The steel was then continuously cast or cast into ingot, with the majority of the continuously cast steel hot rolled into long or flat products of hot-rolled carbon steel.

It is intended that any alternative processes of melting cold ferrous feed, such as the use of electric induction furnaces or any other process which does not use electricity as the primary source of energy to produce carbon steel products described in paragraphs 659(1)(a) through to (c) are considered to fit within the activity description.

It is not necessary that all processes must be carried out at the same site to satisfy the activitydescription. For example subregulation 22A(9) provides that multiple sites carrying on an activity may constitute an activity group. This provision also needs to be read in the context of subclause 659(2), which sets out that hot-rolled carbon steel products produced at a site may also be considered within the activity where these same products were first produced into continuously cast carbon steel at a different site conducting either the manufacture of carbon steel from cold ferrous feed activity or from the integrated iron and steel manufacturing activity.

It is not intended that it is necessary to produce either or both long and flat hot-rolled carbon steel to be considered carrying on the activity provided that continuously cast carbon steel products or ingots of carbon steel are produced. Proposed paragraph 659(1)(c) sets out that hot-rolled carbon steel products may be produced from cold ferrous feed in the manufacture of carbon steel from cold ferrous feed activity. For the avoidance of doubt, this chemical and physical transformation typically proceeds via the intermediate production of continuously cast carbon steel products as the first step, and the second step then proceeds with the physical transformation of continuously cast carbon steel products into hot-rolled carbon steel products. These two intermediate production steps may proceed either at the same site or at different sites.

The input of the activity has been defined to be cold ferrous feed, such as ferrous scrap, pig iron and flat iron. This extends to any iron bearing material and there are no limits on the different classes or categories of iron bearing material which may be used nor a maximum amount of a particular type of iron bearing material that might be used.

The outputs of this activity are continuously cast carbon steel products, ingots of carbon steel and hot-rolled carbon steel products which commenced hot rolling at temperatures in excess of 800°C. Carbon steel is defined in regulation 22A.

The activity does not include the upstream processes which may include the production of cold ferrous feed such as the production of pig iron from iron ore or from other ferrous-bearing products.

63

Cold ferrous feed used to supplement molten iron that is subsequently transformed into carbon steel products in the EITE activity of integrated iron and steel manufacturing is not to be considered an input to this activity. The activity does not include downstream processes such as finishing processes, including, but not limited to, cold-rolling, annealing, pickling or coating of carbon steel products. As such, the relevant site for the application is that where the outputs are actually produced and does not extend to separate sites which may conduct cold ferrous feed production from iron ore, cold-rolling, annealing, pickling or coating of carbon steel products but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

The tonnes of continuously cast carbon steel products, ingots of carbon steel and hot-rolled long or flat products reported as produced by this activity must not be used to claim allocations for any other EITE activity including integrated iron and steel manufacturing.



within the activity or is necessary for the activity to proceed as described; ando onsite processing of waste materials or by-products from the activity to comply with

Commonwealth, State or Territory obligations; waste heat recovery within the activity boundary; steam consumed within the activity boundary; warehousing or storage of activity outputs, raw materials and consumables used by the

activity where this is at the same location as the activity; the preparation of cold ferrous feed prior to any heating and melting into liquid steel; the conduct of secondary metallurgical treatment; the production of cryogenic gases, e.g. oxygen, nitrogen and argon that are consumed in

the activity; casting via processes such as continuous casting or ingot casting into intermediate steel

products; water and waste treatment (including gases etc.) necessary for the activity to be

conducted; and the hot rolling of the crude carbon steel which is produced in the activity.


o transportation of inputs used in the activity to storage at the same location as the activity;

o transportation of the outputs of the activity from storage at the same location as the activity;


64

o electricity generation on the site where the activity is conducted;o transportation of intermediate products between separate site locations conducting the

activity;o the extraction of raw materials prior to the conduct of the activity; ando any finishing processes including, but not limited to, cold rolling, annealing, pickling or

coating of steel products.


This clause provides that manufacture of carbon steel from cold ferrous feed is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of manufacture of carbon steel from cold ferrous feed are:

o for continuously cast carbon steel products and ingots of carbon steel, the baseline is 0.532 MWh per tonne of either or both of saleable continuously cast carbon steel products and saleable ingots of carbon steel that is produced as part of carrying on the EITE activity and is not a relevant product for the activity of integrated iron and steel manufacturing;

o for hot-rolled carbon steel products which are long products, the baseline is 0.133 MWh per tonne of saleable long products of hot-rolled carbon steel that is in coils or straight lengths, is generally produced in rod, bar and structural (section) mills and has a cross sectional shape such as I, T, Y, U, V, H, C, L, square, rectangular, round, flat, hexagonal, angle, channel, structural beam profile or rail profile; and

o for hot-rolled carbon steel products which are flat products, the baseline is 0.116 MWh per tonne of saleable flat products of hot-rolled carbon steel that is flat in profile, such as plate and hot rolled coil, is generally produced in hot strip and plate mills, is generally greater than 600 mm in width and is generally less than 150 mm in thickness.

To be eligible as a relevant product, carbon steel products listed at subclauses 661(1) through to must accord with the definition of carbon steel in regulation 22A, as containing, by mass, more iron (Fe) than any other single element and have a carbon (C) concentration of less than 2 per cent. Relevant standards for measuring the carbon (C) concentration in carbon steel include AS3641.1-1999 Recommended Practice for Atomic emission Spectrometric Analysis, Part 1: Principles and Techniques and AS/NZS 1050.1:1996 Methods for the Analysis of Iron and Steel, Part 1: Sampling Iron and Steel for Chemical Analysis.

To be eligible as a relevant product, continuously cast carbon steel products and/or ingots of carbon steel must have been produced by carrying on the activity as defined by the relevant paragraphs of 659(1)(a) through to (c). While it is typical for the majority of the relevant product of continuously cast carbon steel products to be used as a feedstock to produce another relevant product (i.e. products of hot-rolled carbon steel), it is not necessary for the total output of continuously cast carbon steel product to be hot rolled within the activity boundary. In particular, continuously cast carbon steel which is then transformed into hot-rolled product may be both a relevant product as continuously cast carbon steel and as hot-rolled carbon steel.

As per paragraphs 661(2)(d) through to (g) and 661(3)(f) through to (h) and proposed subclause 661(4), to be eligible as relevant products, hot-rolled carbon steel which are flat or long products, produced from continuously cast carbon steel products must either:

65

o be produced through the carrying on of the activity as defined by relevant paragraphs of 659(1)(a) through to (c) to be eligible as a relevant product (whether at a single site or multiple sites through an activity group); and/or

o be produced through the carrying on of the activity as set out in subclause 659(2) from continuously cast carbon steel products produced through carrying on the activity as defined by relevant paragraphs of 659(1)(a) through to (c) at another site carrying on the manufacture of carbon steel from cold ferrous feed activity which is outside of the activity group of the activity the subject of the application; and/or

o be produced from the carrying on of the activity as set out in subclause 659(2) from continuously cast carbon steel products produced through the activity of the integrated iron and steel manufacturing.

For example, the manufacture of carbon steel may involve two sites within an activity group, site 1 and site 2 (the first activity group): site 1 may produce continuously cast steel products and some hot-rolled products and site 2 may conduct the hot rolling of the remaining continuously cast carbon steel produced by site 1. If site 2 also hot rolls continuously cast carbon steel sourced from site 3, which conducts the activity of manufacture of carbon steel from cold ferrous feed or site 4, which conducts the activity of integrated iron and steel manufacturing, the tonnes of hot-rolled product relating to that sourced from site 3 or site 4 may be considered as part of the first activity group providing they were not included as hot rolled tonnes in any applications for EITE exemption considered in relation to sites 3 and 4.

It is also important to note where multiple sites form an activity group, all relevant products produced as part of that activity across those sites must be referred to each site in the activity group in accordance with the rules in regulation 22B. This is the case even where some products (such as continuously cast carbon steel products) are only produced at one of the sites.

It should also be noted that the definitions of long and flat products use the word 'generally' in a number of places to accommodate the possibility of limited exceptions to these requirements being met for every tonne of hot-rolled product where the majority of the hot-rolled product does meet the requirement. However, a tonne of hot-rolled product cannot be both a flat and a long product.

The tonnes of continuously cast carbon steel products, long product hot-rolled carbon steel and flat product hot-rolled carbon steel must be of saleable quality. Therefore, tonnes that are scrapped, recycled, remelted, lost or discarded are not to be included in the tonnes of relevant product.

66

6.21 Petroleum refining

Part 22 Petroleum refining Division 1 Petroleum refiningClause 662 – Petroleum refining

This clause provides that the activity of petroleum refining is the chemical and physical transformation of stabilised crude petroleum oil, which may be supplemented with 1 or more of condensate, tallow, vegetable oil, eligible petroleum feedstocks and other petroleum feedstocks, to produce a range of refined petroleum products through the following processes:a) the distillation of stabilised crude petroleum oil, condensate, tallow, vegetable oil or other petroleum feedstocks;b) the adjustment of the molecular weight and structure of hydrocarbons (such as that which occurs through catalytic or hydro-cracking, steam or catalytic reforming, polymerisation, isomerisation or alkylation);c) the blending of products from distillation and adjustment of molecular weight and structure to produce Australian and international standard diesel, jet fuel and unleaded petrol;d) the production of two or more of the following refinery products saleable in Australian or international markets: hydrogen, ethane, propane, refinery grade propylene, polymer grade propylene, liquefied petroleum gas, butane, naphtha, aviation gasoline, before oxygenate blend, kerosene, heating oil, solvents, lubricant base stocks, leaded petrol, waxes and bitumen.

While each of the processes in (a) to (d) must be conducted within the relevant financial year to be considered conducting the EITE activity, it is not necessary that all four processes need be conducted in relation to every output listed in items (c) and (d) above.

The terms condensate, eligible petroleum feedstocks, stabilised crude petroleum oil and unleaded petrol are defined in regulation 22A.

It is not intended that any alternative processes to produce any of the products listed in (c) and (d) fit within the activity description.

The activity description is not satisfied through the processing of other feedstocks not listed as inputs to the petroleum refining activity. The activity is also not satisfied in the undertaking of the production of carbon black or ethene (ethylene) as defined under the clauses 611 and 665 respectively. Petroleum refining as defined in the regulations is not satisfied by crude oil or natural gas exploration, production, transmission or distribution, waste oil reprocessing or by only blending oil or other feedstocks to produce any of the final products.

The activity would not be satisfied where the total kilolitres of Australian and international standard diesel, jet fuel, unleaded petroleum, bitumen or lubricant base stocks are not equal to or greater than 75 per cent of the total eligible inputs to the activity (the '75 per cent test'). For a standard application (including significant expansions) the test outlined in 662 (2) (b) (i) is in relation to the financial year which ended 6 months before the application year. Thus, for a 2011 application, the 75 per cent test would need to be satisfied with respect to the period from 1 July 2009 to 30 June 2010. If these tests in subclause (2) are not met, the activity is not carried out and no exemption certificate may be issued in respect of the relevant application year. The following year the applicant would be eligible to come back as a new entrant site and would be allocated on the basis of 'new and expected additional production'.

The inputs of the activity have been defined to include stabilised crude petroleum oil, condensate, tallow, vegetable oil, eligible petroleum feedstocks (as defined in regulation 22A) and other petroleum feedstocks (such as feedstocks which would not meet all of the criteria to qualify as eligible petroleum feedstocks but are nonetheless used in the process). However, only certain inputs are relevant products in accordance with proposed clause 664 (1).

67

The outputs of the activity, namely diesel, unleaded petrol, jet fuel, hydrogen, ethane, propane, refinery grade propylene, polymer grade propylene, liquefied petroleum gas, butane, naphtha, aviation gasoline, before oxygenate blend, kerosene, heating oil, solvents, lubricant base stocks, leaded petrol, waxes and bitumen are all to be of standard acceptable either for sale in Australia or internationally. Other by-products may also be produced (such as fuel oil and intermediate products).

The activity does not include the upstream exploration, extraction, and any production or processing of stabilised crude petroleum oil, condensate, tallow, vegetable oil or other petroleum feedstocks prior to its introduction to the activity. Any eligible petroleum feedstocks reported as relevant products are not to have been produced by undertaking any EITE activity as defined in these regulations, such as another instance of petroleum refining or high purity ethanol production. As such, the relevant site for the application is that where the stabilised crude petroleum oil, condensate, tallow, vegetable oil and eligible petroleum feedstocks are actually processed in the conduct of petroleum refining and does not extend to separate sites which may conduct the production of these inputs or the further refining of any petroleum products at a separate facility but not the activity as described. It also does not extend to storage of either the inputs or final products at any remote sites. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9).

Subparagraph 662 (2) (b) (ii) outlines the 75 per cent test appropriate for the carrying out of the activity in the event of a new entrant site. This clause provides for circumstances where, because an application may be made prior to the year for which the exemptions will apply, it is not possible for a new entrant site to prove that the activity has been conducted over the full relevant financial year given that more than half of that year is in the future. Accordingly, for a new entrant petroleum refinery, the test as outlined is that it is likely that the combined volume of diesel, jet fuel, unleaded petrol, lubricant base stocks and bitumen, at 15 °C and 1 atmosphere, will be equal to or greater than 75 per cent of the total kilolitres of the inputs of stabilised crude petroleum oil, condensate, tallow, vegetable oil and eligible petroleum feedstocks. An applicant would be expected to present probative evidence to establish this.

Subclause 662 (3) is a clarification to the clause which provides that not every process needs to be conducted in relation to each output. For instance, some products are only distilled without the adjustment of the molecular weight and structure.

Subclause 662 (5) defines the concept of application year in relation to the scheme year to which the exemption applies (which may begin after an application is submitted).



o machinery used to move materials within and as part of the activity; o control rooms, laboratories, maintenance workshops; o machinery used to create non-electrical energy for use in the activity; o the processing of by-products where it involves the recovery of materials for re-



waste heat recovery within the activity boundary; steam consumed within the activity boundary;

68

the additional processing of any stabilised crude petroleum oil derivatives at the site where products listed in (3) and (4) are produced;

the on-site production of hydrogen at the refinery where that hydrogen is consumed within the activity;

the production of nitrogen and oxygen where consumed within the activity boundary; emissions associated with cooling water pumps; the pre-treatment of petroleum fractions to remove impurities that poison the catalysts,

treat products to meet Australian specifications and may include process units for the manufacture of lubricant base stocks and bitumen;

the regeneration of catalysts consumed within the activity boundary; and emissions from storage tanks located at the site where the activity is undertaken and

which are used to store crude oil, intermediate and final products.






production of catalysts; emissions associated with the transferral of stabilised crude petroleum oil from a wharf

or other loading point to the stabilised crude petroleum oil storage vessel on the site where the activity is conducted;

emissions associated with the transferral of the final refined product from the final product storage tank on the site where the activity is conducted to a wharf or other loading point; and

emissions from storage tanks, pumps and wharf operations located off-site from where the activity is conducted.

Clause 663 – Classification of activity

This clause provides that the activity of petroleum refining is classified as a highly emissions-intensive activity.

Clause 664 – Electricity baseline for calculating exemption

This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of petroleum refining is 0.0421 MWh per kilolitre of stabilised crude petroleum oil, condensate, tallow, vegetable oil and eligible petroleum feedstocks.

To be eligible as a relevant product the combined volume of diesel, jet fuel, unleaded petrol, lubricant base stocks and bitumen, at 15°C and 1 atmosphere, that is produced from the relevant products listed above is equal to or greater than 75 per cent of the total kilolitres of those inputs used in the financial year relevant to the calculation of the exemption in regulation 22ZB. Where 'new or expected additional production' is involved, a financial year is used which will not have ended at the time of the application (the financial year which begins 6 months before the application year). In this situation the test is whether the amounts are likely to be equal to or greater than 75 per cent.

69

Where the test is not met for a financial year, no relevant product is used to calculate exemptions. This is a necessary condition as petroleum refining is different to other activities in that the calculation is on the basis of inputs to the processes rather than outputs.

For example, a site, which is not a new entrant, may meet the 75 per cent test in the relevant financial year but not in the next financial year (the one that begins 6 months before the application year). In that situation, the applicant could not apply for an allocation as a significant expansion as the year used to estimate 'new and expected additional production' would not meet the 75 per cent test.

The stabilised crude petroleum oil, condensate, tallow, vegetable oil and eligible petroleum feedstocks must have been processed by carrying on the activity as defined by proposed clause 662 to be eligible as a relevant product. That is, to be reported as the relevant products the input must be distilled and/or have had their molecular weight and structure adjusted. Subsequently the products of these two processes must be either blended into Australian or International standard diesel, unleaded petrol and jet fuel, produced into the products listed in 662 (d) or transformed into another petroleum by-product (such as fuel oil). Accordingly, an input which is just used in blending without distillation or the adjustment of molecular weight and structure (e.g. a blendstock) would not be included as a relevant product.

70

6.22 Ethene (ethylene) production

Part 23 Production of ethene (ethylene)Division 1 Production of ethene (ethylene)Clause 665 – Production of ethene (ethylene)

This clause provides that the production of ethene is the chemical transformation of hydrocarbons to produce ethene (C2H4, ethylene), where the concentration of ethene (C2H4, ethylene) is equal to or greater than 99 per cent with respect to mass.

The activity as conducted during the period used to assess the eligibility of the activity involved steam cracking ethane to produce ethene (ethylene) with supplemental feedstocks used at times, including naphtha, liquefied petroleum gas or its components propane and butane. In this period by-products of the activity including refinery grade propene (propylene) and pyrolysis gasoline were also produced.

It is intended that the alternative production process of catalytic cracking to produce ethene(ethylene) where the concentration of ethene (ethylene) is equal to or greater than 99 per cent with respect to mass would be considered to fit within the activity definition. It is also considered that ethene produced at a petroleum refinery through downstream processing of hydrocarbons, where the concentration of ethene is equal to or greater than 99 per cent with respect to mass fits within the activity description and is a separate activity to petroleum refining.

This activity is not satisfied through the undertaking of ethene production that does not produce ethene that is equal to or greater than 99 per cent with respect to mass. The production of and further refining of refinery grade propene (propylene) into polymer grade propene (propylene) is not considered part of this activity.

The activity does not include the upstream extraction or production of the input/s to the activity including the production of ethane, propane, butane, LPG, naphtha or other hydrocarbon feedstock.

Further, the activity does not include the downstream processing of ethene (ethylene) to polyethylene, nor the processing of any by-products from the production of ethene (ethylene) such as pyrolysis gasoline or refinery grade propylene. As such, the relevant site for the purpose of the application is that where the ethene (ethylene) is actually produced and does not extend to separate sites which may conduct upstream or downstream processing of either the ethene (ethylene) or any relevant by-products but not the activity as described. Generally, it is expected that where upstream extraction or production processes or downstream polymerisation processes are carried out at separate sites, those sites will not be regarded as carrying out the EITE activity of the production of ethene (ethylene) for the purpose of subregulation 22A(9). However, it is understood that some downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example:o machinery used to move materials within and as part of the activity; o control rooms, laboratories, maintenance workshops; o machinery used to create non-electrical energy for use in the activity;

71

o the processing of by-products where it involves the recovery of materials for re-use within the activity or is necessary for the activity to proceed as described; and


production of nitrogen and hydrogen consumed within the activity boundary; waste heat recovery within the activity boundary; steam consumed within the activity boundary; liquefaction in the chilling train prior to ethene (C2H4, ethylene) product storage; and onsite transportation to storage and storage of saleable ethene (C2H4, ethylene), refinery

grade propene (C3H6, propylene) and pyrolysis gasoline.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: – transportation of input/s used in the activity to storage at the same location as the activity;

o transportation of the output/s of the activity from storage at the same location as the activity;

o complementary activities, such as packaging, head office, administrative and marketing operations, either at the same location as the activity or elsewhere; and

o emissions associated with the generation of electricity on the site where the activity is conducted.


This clause provides that the production of ethene (ethylene) is classified as a highly emissions- intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of ethene is 0.275 MWh per tonne of 100 per cent equivalent ethene (ethylene).

The 100 per cent equivalent ethene (ethylene) is that contained within the ethene (ethylene) where the concentration of ethylene is equal to or greater than 99 per cent with respect to mass.

To be eligible as a relevant product the ethene (ethylene) the ethene (ethylene) must be:o produced by carrying on the EITE activity; ando of saleable quality.

The relevant standards for determining the concentration of ethene in the final saleable product include:

o ASTM D86-09e1 Standard Test Method for Distillation of Petroleum Products at Atmospheric Pressure

o ASTM D2504 - 88(2004)e1 Standard Test Method for Noncondensable Gases in C2 and Lighter Hydrocarbon Products by Gas Chromatography

o ASTM D2505 - 88(2004)e1 Standard Test Method for Ethylene, Other Hydrocarbons, and Carbon Dioxide in High-Purity Ethylene by Gas Chromatography

o ASTM D4052 - 09 Standard Test Method for Density, Relative Density, and API Gravity of Liquids by Digital Density Meter; and

o ASTM D6159 - 97(2007) Standard Test Method for Determination of Hydrocarbon Impurities in Ethylene by Gas Chromatography

72

The ethene (ethylene) must have been produced by carrying on the activity as defined by clause 665 to be eligible as a relevant product. Accordingly, the ethene (ethylene) must have been produced to have a concentration of equal to or greater than 99 per cent from the relevant inputs to be included in the tonnes of relevant product.

The ethene (ethylene) must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of ethene (ethylene) which are recycled, vented or flared are not to be included in the tonnes of relevant product.

73

6.23 Polyethylene production

Part 24 Production of polyethylene Division 1 Production of polyethyleneClause 668 – Production of polyethylene

This clause provides that the production of polyethylene is the chemical transformation of ethene (C2H4, ethylene) to produce polyethylene with a standard density of equal to or greater than 0.910g/cm3 where the standard density refers to the density of the material moulded to a thickness of 1.9 mm using Procedure C of Annex A1 of ASTM D4703.

The activity as conducted during the period used to assess the eligibility of the activity involved polymerisation of ethene (ethylene) with additives, including comonomers, resins and other additives to produce linear low density polyethylene, low density polyethylene and high density polyethylene.

It is intended that alternative polymerisation processes, the use of different comonomers, resins and other additives to those used during the baseline period or the production of other forms of polyethylene such as medium density polyethylene where the polyethylene’s standard density is equal to or greater than 0.910 g/cm3 would be considered to fit within the activity description.

This activity is not satisfied through the undertaking of polyethylene production that does not produce polyethylene that is equal to or greater than 0.910 g/cm3. It does not extend to the production of ethene (ethylene) co-polymers and is not intended to include other polymerisation processes which use any monomer that is not ethene (ethylene) such polypropylene manufacture.

The activity does not include the upstream production of ethene (ethylene). Further, the activity does not include the downstream processing of polyethylene following the pelletisation process including any moulding, blowing or shaping of plastic products. As such, the relevant site for the purpose of the application is that where the polyethylene is actually produced in its pelletised form and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where upstream production processes or downstream production processes are carried out at separate sites, those sites will not be regarded as carrying out the EITE activity for the purpose of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.





o onsite processing of by-products and waste materials from the activity to comply with Commonwealth, State or Territory obligations.

74

initial extrusion and pelletisation of polyethylene to produce pelletised saleable product;

conveyance of raw pelletised polyethylene to bulk storage vessels on the site where the activity is conducted;

production of nitrogen and hydrogen consumed within the activity boundary; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.


transportation of input/s used in the activity to storage at the same location as the activity;

transportation of the output/s of the activity from storage at the same location as the activity;



the chemical transformation of hydrocarbon to ethene (ethylene); and downstream processing of the pelletised polyethylene, including but not limited to

secondary extrusion, moulding or re-melting of the polyethylene products.


This clause provides that the production of polyethylene is classified as a moderately emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’sexemption in respect of the production of polyethylene is 0.646 MWh per combined tonne of pelletised polyethylene with a standard density of equal to or greater than 0.910 g/cm3.

The standard density of the polyethylene product should be measured using material moulded to a thickness of 1.9 mm using Procedure C of Annex A1 of ASTM D4703. As ASTM D4703 is updated, it is intended that the updated procedures will apply to the density measurement.

To be eligible as a relevant product, the tonnes of polyethylene should be reported on a combined tonnes of saleable pelletised polyethylene basis, that is the tonnes of polyethylene reported as the output of the activity.

The polyethylene must have been produced by carrying on the activity as defined by clause 668 to be eligible as a relevant product. Accordingly, the polyethylene must have been produced to have a standard density of equal to or greater than 0.910 g/cm3 measured in accordance with the procedures specified for the relevant product, that is Procedure C of Annex A1 of ASTM D4703.

The polyethylene must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of pelletised polyethylene which are recycled, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable polyethylene but then that polyethylene is remelted and reshaped, their tonnage should be counted only once for the definition of a relevant product.

75

6.24 Synthetic rutile production

Part 25 Production of Synthetic rutile Division 1 Production of Synthetic rutileClause 671 – Production of Synthetic rutile

This clause provides that the production of synthetic rutile is the chemical transformation of ilmenite ore (ore containing FeTiO3) through the reduction of iron oxides in order to increase the titanium dioxide (TiO2) concentration to produce synthetic rutile that has a titanium dioxide (TiO2) concentration of equal to or greater than 88 per cent and less than 95.5 per cent, and has an iron (Fe) concentration of greater than 0.5 per cent.

The activity as conducted during the period used to assess the eligibility of the activity involved removing the contained iron in ilmenite to produce synthetic rutile using the Becher process. In the Becher process ilmenite (containing 55 per cent to 65 per cent TiO2) was fed to a rotary kiln to reduce the iron oxide to metallic iron. Ilmenite grains were then converted to porous synthetic rutile grains with metallic iron and other impurity inclusions. The iron was precipitated as hydrated iron oxide from the synthetic rutile grains and a mild acid treatment was used to dissolve the impurities and any residual iron.

The production of synthetic rutile and the production of white titanium dioxide pigment occur within the same production chain. Because of the requirement for synthetic rutile to have an iron concentration of greater than 0.5 per cent, the activities of the production of synthetic rutile and the production of white titanium dioxide pigment cannot both be conducted to produce the same tonne of output.

It is intended that alternative processes of the Benelite process to produce synthetic rutile would be considered to fit within the activity description. In the Benilite process ilmenite is partially reduced in a rotary kiln, followed by a multi-stage hydrochloric acid leach under pressure to remove impurities. The leached product is calcined to produce a synthetic rutile.

The activity description is not satisfied through the undertaking of mining and concentrating(including wet and dry concentrating and electrostatic separation) of natural rutile.

The inputs of the activity have been defined to include any grade of ilmenite ore (ore containing FeTiO3).

The output of this activity is saleable synthetic rutile directly produced from ilmenite ore (ore containing FeTiO3), where synthetic rutile has a content of equal to or greater than 88 per cent and less than 95.5 per cent titanium dioxide, and an iron concentration of greater than 0.5 per cent.

The activity does not include the upstream extraction (mining) and separation of ilmenite from other minerals or the downstream production of white titanium dioxide pigment. As such, the relevant site for the application is that where the synthetic rutile is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

76


which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example:




waste heat recovery within the activity boundary; steam consumed within the activity boundary; and emissions associated with the production of nitrogen and oxygen consumed within the

activity.




conducted; and extraction (eg. mining) and processing (eg. wet/dry concentration, magnetic and

electrostatic separation) of iron titanium oxide (FeTiO3, ‘ilmenite’).


This clause provides that the production of synthetic rutile is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of synthetic rutile is 0.304 MWh per tonne of saleable synthetic rutile directly produced from ilmenite ore (ore containing FeTiO3) which results from carrying out the activity as described, where synthetic rutile has a content of equal to or greater than 88 per cent and less than 95.5 per cent titanium dioxide (TiO2), and an iron (Fe) concentration of greater than 0.5 per cent, with respect to mass.

The tonnage of the relevant synthetic rutile should be measured accordingly to ordinary measurement rules applicable in the industry.

To be eligible as a relevant product, the synthetic rutile must:(a) have a titanium dioxide (TiO2) concentration of equal to or greater than 88 per cent and less than 95.5 per cent with respect to mass; and(b) have an iron (Fe) concentration of greater than 0.5 per cent with respect to mass; and

77

(c) be produced by carrying on the EITE activity; and(d) be of saleable quality.

The synthetic rutile must have been produced by carrying on the activity as defined by clause 671 to be eligible as a relevant product. For instance, where imported synthetic rutile is blended with product produced from the activity, only the domestically produced synthetic rutile would be included in the tonnes of the relevant product.

The synthetic rutile must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of synthetic rutile which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

78

6.25 Manganese production

Part 26 Production of ManganeseDivision 1 Production of ManganeseClause 674 – Production of Manganese

This clause provides that the production of manganese activity is the physical and chemical transformation of manganese (Mn) ore into manganese sinter (Mn3O4); and/or manganese ore and/or manganese sinter into ferromanganese alloy and/or silicomanganese alloy.

The activity as conducted during the period used to assess the eligibility of the activity involved an electric arc furnace (EAF) process where manganese ore was smelted to create manganese ferroalloys (ferromanganese and silicomanganese). Before smelting, smaller sized particles of manganese ore were sintered in a sintering downdraft strand to produce manganese sinter, either for use in the EAF or for external sale. The use of sinter in the process reduced the overall energy intensity of the EAF furnaces.

It is intended that alternative processes such as the use of a blast furnace to produce manganese ferroalloys from manganese ore would be considered to fit within the activity description. It is also intended that the production of any combination of the manganese products, including producing each product on a stand-alone basis, would qualify as undertaking this activity. For example, a stand-alone sinter producer which did not produce either ferromanganese or silicomanganese would be considered to be undertaking the activity, as would a stand-alone ferromanganese producer or silicomanganese producer that did not produce sinter.

The activity description is not satisfied through the undertaking of the production of manganese where the final product is not:

o manganese sinter with a concentration of manganese equal to or greater than 40 per cent with respect to mass;

o ferromanganese alloy with a concentration of manganese equal to or greater than 67 per cent manganese with respect to mass; and/or

o silicomanganese with a concentration of manganese equal to or greater than 60 per cent with respect to mass and a concentration of silicon (Si) equal to or greater than 12 per cent with respect to mass.

The inputs of the activity have been defined to be manganese ore and/or manganese sinter.However, it is intended that slag from a ferromanganese furnace can be used as an input into silicomanganese smelting if the ferromanganese smelting occurs on the same site as the silicomanganese smelting. However, silicomanganese produced from bought-in ferromanganese slag is not considered to be an output of the activity or a relevant product.The outputs of the activity are manganese sinter, which is commonly further refined to produce manganese or manganese ferroalloy, and ferromanganese and silicomanganese alloys commonly used in the production of steel.

The activity does not include the mining and pre-processing of manganese ore, the production of any other manganese products apart from manganese sinter, ferromanganese alloy or silicomanganese alloy, or the post-cast rolling, extruding, re-forming or alloying of ferromanganese or silicomanganese. As such, the relevant site for the application is that where the manganese sinter, ferromanganese alloy or silicomanganese alloy are actually produced and does not extend to separate sites which may conduct mining and pre-processing of manganese ore, the production of any other manganese products, or the post-cast rolling, extruding, re-forming or alloying of ferromanganese or silicomanganese but not the activity as described.

79

Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9).

However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


o The direct emissions from, and electricity use of, machinery, equipment and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example:




o production of oxygen consumed within the activity; o onsite preparation of refractory components; o waste heat recovery within the activity boundary; o steam consumed within the activity boundary; o crushing, grinding and preparation of raw materials contiguous with the equipment

required to conduct the transformation as described; and o crushing and screening of ferromanganese and silicomanganese alloys to produce a

saleable product.


o transportation of inputs used in the activity to storage at the same location as the activity;

o transportation of the outputs of the activity from storage at the same location as the activity;


o emissions associated with the generation of electricity on the site where the activity is conducted;

o mining and pre-processing of manganese ores and/or secondary materials containing manganese, and other intermediate inputs; and

o downstream processing of silicomanganese and/or ferromanganese including rolling, extruding, re-forming or alloying.


This clause provides that the production of manganese activity is classified as a highly emissions-intensive activity.


80

This clause provides that the electricity baselines for calculating the amount of a liable entity’s exemption in respect of the production of manganese activity are:

o for manganese sinter, 0.030 MWh per tonne of manganese sinter with a concentration of manganese equal to or greater than 40 per cent with respect to mass;

o for the production of ferromanganese alloy, 2.61 MWh per tonne of ferromanganese alloy with a concentration of manganese equal to or greater than 67 per cent manganese with respect to mass; and

o for the production of silicomanganese, 4.31 MWh per tonne of silicomanganese alloy with a concentration of manganese equal to or greater than 60 per cent with respect to mass and a concentration of silicon (Si) equal to or greater than 12 per cent with respect to mass.

The tonnage of the relevant outputs should be measured according to measurement techniques in practice in the industry.

To be eligible as relevant product:(a) the manganese sinter, ferromanganese alloy or silicomanganese alloy must be produced by carrying on the EITE activity; and(b) the manganese sinter, ferromanganese alloy or silicomanganese alloy must be of saleable quality; and(c) the manganese sinter, ferromanganese alloy or silicomanganese alloy must have been produced by carrying on the activity as defined by clause 674 to be eligible as a relevant product.

The manganese sinter, ferromanganese alloy or ferromanganese alloy must be of saleable quality. This is defined by regulation 22C. Manganese sinter, ferromanganese alloy or silicomanganese alloy which is discarded or reprocessed because it does not meet output specifications is not of saleable quality.

81

6.26 Clinker production

Part 27 Production of Clinker Division 1 Production of ClinkerClause 677 – Production of Clinker

This clause provides that the production of clinker is the physical and chemical transformation of calcium carbonate compounds (CaCO3, limestone), other calcium carbonate (CaCO3) feedstocks; and either or both of clay, silicon dioxide (SiO2, silica), iron (Fe) and/or aluminium oxide (Al2O3, alumina) feedstocks. These feedstocks are fused together at a temperature greater than 1000ºC into Portland cement clinker that has a concentration of calcium silicates equal to or greater than 60 per cent by mass, has a concentration of magnesium oxide (MgO) less than or equal to 4.5 per cent and is useable in the making of Portland cement.

Subclause 677(1A) clarifies that the activity may also include the subsequent transformation of the Portland cement clinker produced through the process in the first paragraph into cement through milling (that is, through the process of comminution with gypsum and other additives). This means that electricity used to transform Portland cement clinker (produced as part of the EITE activity in Australia) into cement is part of the activity, but electricity used to transform clinker that is not produced as part of the EITE activity in Australia into cement would not be part of the activity.

The activity as conducted during the period used to assess the eligibility of the activity involved the fusing together of calcium carbonate compounds and either clay and/or silicon dioxide and/or iron and/or aluminium oxide in a kiln to create a concentration of calcium silicates that form clinker.

1 - Saleable Portland cement clinker is the solid material produced by fusing calcium carbonate and other feedstocks in a kiln that has sintered into nodules. Clinker can later be ground with calcium sulfate dihydrate (gypsum) and other additives to become Portland cement clinker. The activity description is not satisfied through the undertaking of clinker production where the final product is not Portland cement clinker.

The inputs to the activity have been defined to include calcium carbonate sources (including limestone and shell sand), clay, silicon dioxide, iron and aluminium oxide feedstocks.

The activity does not include the extraction of raw materials, crushing or grinding of raw material inputs that are not contiguous with the clinker production process.

Downstream processing of clinker including rolling, milling and blending processes into cement may be included if the process includes the production of clinker.

It is understood that some processing or ancillary processes excluded from the definition may be conducted at the same sites as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example:o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;

82

o the processing of by-products where it involves the recovery of materials for re-use within the activity or is necessary for the activity to proceed as described; and

o onsite processing of waste materials from the activity to comply with Commonwealth, State or Territory obligations.

waste heat recovery within the activity boundary; steam consumed within the activity boundary; crushing, pre-homogenisation and grinding of raw materials that is contiguous with the

clinker production process; kiln dust production and reprocessing; and reject production where this is not recycled in the process.




conducted; extraction of raw materials; crushing of raw materials that is not contiguous with the clinker production process; and the production of gypsum, slag, flyash or other additives used in the physical

transformation of Portland cement clinker produced by the activity into cement


This clause provides that the production of clinker is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of clinker is 0.1252 MWh per tonne of Portland cement clinker that consists of at least 60 per cent by mass of calcium silicates, a maximum magnesium oxide (MgO) mass content of 4.5 per cent and is useable in the making of Portland cement whether or not a downstream milling process has been undertaken as part of the same production process.

The tonnage of the relevant of Portland cement clinker must be weighed on a dry weight basis in accordance with ordinary measurement rules applicable in the industry.

To be eligible as a relevant product, the clinker must:(a) be produced as part of carrying out an EITE activity; and(b) be of saleable quality.

The production of clinker must have been produced by carrying on the activity as defined by clause 677 to be eligible as a relevant product.

The clinker must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of clinker, which are scrapped, lost or discarded are not to be included in the tonnes of relevant product. Additionally, if inputs are transformed into saleable clinker which is then

83

recycled prior to being sold, this tonnage should be counted only once for the definition of a relevant product.

84

6.27 Lime production

Part 28 Production of LimeDivision 1 Production of LimeClause 680 – Production of Lime

This clause provides that the production of lime is the physical and chemical transformation through the calcining process of calcium and magnesium sources (e.g. calcium carbonate (CaCO3) and magnesium carbonate (MgCO3)) into lime produced to saleable quality with a calcium oxide (CaO) and/or magnesium oxide (MgO) content equal to or greater than 60 per cent by mass.

The activity as conducted during the period used to assess the eligibility of the activity involved the burning of limestone or shell sand in a rotary kiln, shaft kiln or fluidised bed kiln to create lime.

The activity description is not satisfied through undertaking production of lime where the final product does not have a calcium oxide (CaO) and/or magnesium oxide (MgO) content equal to or greater than 60 per cent by mass. The activity is also not satisfied by the production of pulverised limestone, commonly called agricultural lime.

The inputs of the activity have been defined to include calcium carbonate and magnesium carbonate sources such as limestone, dolomite and shell sand.

The activity does not include the extraction of raw materials, crushing or grinding of raw material inputs that are not contiguous with the production of lime process or the downstream processing of lime including the production of hydrated lime. However, it is understood that some processing or ancillary processes excluded from the definition may be conducted at the same sites as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.

InclusionsFor the purposes of the formal assessment, emissions and electricity use which are to be included within the activity boundary are:



re-use within the activity or is necessary for the activity to proceed as described; and


waste heat recovery within the activity boundary; steam consumed within the activity boundary; kiln dust production;– crushing, grinding and preparation of raw materials contiguous

with the equipment required to conduct the transformation as described; and reject production where this is not recycled in the process.



85




extraction of raw materials; crushing, grinding and preparation of raw materials not contiguous with the equipment

required to conduct the transformation as described; and downstream processing of lime, e.g. hydrated lime, lime slurry, finishing lime or lime

putty.


This clause provides that the production of lime is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of lime is 0.0476 MWh per tonne of lime with a concentration of calcium oxide (CaO) and/or magnesium oxide (MgO) equal to or greater than 60per cent by mass. For example, the lime may have a calcium oxide content of 60 per cent by mass (and no magnesium oxide) or a 30 per cent concentration of calcium oxide by mass and a 30 per cent concentration of magnesium oxide by mass.

The tonnage of the relevant lime must be weighed on a dry weight basis in accordance with ordinary measurement rules applicable in the industry.

To be eligible as a relevant product, the lime must:(a) be produced as part of carrying out an EITE activity;(b) not be a relevant product for the EITE activity of integrated iron and steel manufacturing; and(c) be of saleable quality.

The production of lime must have been produced by carrying on the activity as defined by clause 680 to be eligible as a relevant product.

The lime must not be part of an integrated iron and steel manufacturing activity and thus be eligible for the electricity baseline for lime production in that activity. However, where lime is produced independently of an integrated iron and steel manufacturing activity but later used in that activity, it may still be a relevant product for the activity of lime production. Most significantly, lime produced within the integrated iron and steel production process may only be allocated under that EITE activity and no tonne of lime can be a relevant product twice.The lime must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of lime, which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

Additionally, if inputs are transformed into saleable lime which is then recycled prior to being sold, this tonnage should be counted only once for the definition of a relevant product.

86

6.28 Fused alumina production

Part 29 Production of fused aluminaDivision 1 Production of fused aluminaClause 683 – Production of fused alumina

This clause provides that the production of fused alumina is the physical transformation of alumina (aluminium oxide (Al2O3)) by heating it to its fusion point to produce fused alumina that:(a) has an alpha alumina crystalline structure; and(b) has a concentration of aluminium oxide equal to or greater than 99.0 per cent.

The activity as conducted during the period used to assess the eligibility of the activity involved heating alumina to its fusion point in an electric arc furnace. Emissions associated with the crushing and milling of cast fused alumina in order to produce saleable fused alumina were also considered part of this activity.

The activity description is not satisfied through the undertaking of alumina refining or through the production of brown fused alumina, where bauxite is transformed into brown fused alumina by heating it to its fusion point.

The fact that a batch of fused alumina does not have a purity equal to or greater than 99 per cent does not mean that the activity is not conducted at times when the purity is equal to or greater than 99 per cent in other batches.

The inputs of the activity have been defined to include any grade of alumina.

The output of the activity is saleable fused alumina (aluminium oxide, Al2O3) with an alpha alumina crystalline structure and a purity equal to or greater than 99 per cent.

The activity does not include the upstream mining and processing of bauxite to produce alumina. As such, the relevant site for the application is that where the fused alumina is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.






waste heat recovery within the activity boundary; steam consumed within the activity boundary; and

87

crushing and milling of fused alumina (aluminium oxide, Al2O3) in order to produce saleable fused alumina.





emissions associated with the generation of electricity on the site where the activity is conducted; and

mining and processing of bauxite to produce alumina (aluminium oxide, Al2O3) inputs prior to the fusion process.


This clause provides that the production of fused alumina is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of fused alumina is 2.03 MWh per tonne of saleable fused alumina (aluminium oxide, Al2O3) with an alpha alumina crystalline structure and a purity equal to or greater than 99 per cent.

The tonnage of the relevant fused alumina should be measured accordingly to ordinarymeasurement rules applicable in the industry. To be eligible as a relevant product, the fused alumina must:(a) have an alpha alumina crystalline structure; and(b) have a concentration of aluminium oxide equal to or greater than 99 per cent; and(c) be produced by carrying on the EITE activity; and(d) be of saleable quality.

The fused alumina must have been produced by carrying on the activity as defined by clause 683 to be eligible as a relevant product. For instance, where imported fused alumina is blended with the product produced from the activity, only the domestically produced fused alumina would be included in the tonnes of the relevant product.

The fused alumina must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of fused alumina which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

88

6.29 Copper production

Part 30 Production of copperDivision 1 Production of copperClause 686 – Production of copper

This clause provides that the production of copper is either or both of the following:(a) the physical and chemical transformation of concentrated mineralised copper compounds into either or both of:

(i) copper cathode that has a concentration of copper greater than 99.90 per cent;(ii) copper anode that has a concentration of copper:

(A) equal to or greater than 99 per cent; and(B) equal to or less than 99.9 per cent;

(b) the physical and chemical transformation of copper anode into copper cathode that has a concentration of copper greater than 99.9 per cent where the copper anode:

(i) has a concentration of copper of:(A) equal to or greater than 99 per cent; and(B) equal to or less than 99.9 per cent; and

(ii) was not produced as part of the transformation in paragraph (a)(i).

The activity as conducted during the period used to assess the eligibility of the activity involved two distinct processes for producing copper cathode from concentrated mineralised copper compounds, a pyrometallurgical process and a hydrometallurgical process. The pyrometallurgical process involved the smelting of copper sulphide concentrate to produce copper anode and the further electrolytic refining of the resultant copper anode to produce copper cathode. The electrolytic refining part of the activity included the refining of bought-in copper anode and equivalent products to produce copper cathode. Spent copper anode which was not transformed into copper cathode was also recycled back into copper anodes. The hydrometallurgical process involved the electrowinning of copper electrolyte solution to produce copper cathode.

It is intended that alternative processes to produce copper cathode and/or copper anode from concentrated mineralised copper compounds would be considered to fit within paragraph (a) of the activity description. It is also intended that alternative processes to produce copper cathode from copper anode would be considered to fit within paragraph (b) of the activity description. For the purposes of the activity, the definition of copper anode is also intended to include any equivalent copper product suitable for input into an electrolytic refining process, including copper scrap and copper cathode which does not meet industry measurement standards.

The activity description is not satisfied through the undertaking of copper production where thefinal product is not: copper cathode that has a concentration of copper greater than 99.9 per cent; and/or copper anode that has a concentration of copper between 99 per cent and 99.9 per cent

(inclusive).

The inputs of the activity have been defined to be concentrated mineralised copper compounds and/or copper anode. The definition of concentrated mineralised copper compounds includes: copper sulphide concentrates that have a concentration of copper of 20 per cent or more on a dry weight basis and copper electrolyte solution that has a concentration of copper of 35 grams or more per litre of electrolyte.

The outputs of the activity are copper anode that has a concentration of copper of 99 per cent or higher; and 99.9 per cent or lower, and/or copper cathode that has a concentration of copper of more than 99.9 per cent.

89

Where anodes are produced at one site and transferred to another site for processing into cathodes, it is intended that paragraph (a) of the activity description could be satisfied by the activity being conducted across two sites (and thus forming an activity group) or that an activity may be conducted at one site through paragraph (a) and at the second site through paragraph (b). The important issue is that production is not doubly allocated through the differentiated electricity baselines which are then applied.

The activity does not include the mining, ore preparation, treatment and/or concentrating ofmineralised copper compounds to produce copper concentrate or electrolyte; the production of any other copper products apart from copper anode or copper cathode as defined; or the post-cast rolling, extruding, re-forming or alloying of copper cathode. As such, the relevant site for the application is that where the copper anode or copper cathode are actually produced and does not extend to separate sites which may conduct mining, ore preparation, treatment and/or concentrating of mineralised copper compounds to produce copper concentrate or electrolyte; the production of any other copper products apart from copper anode or copper cathode as defined; or the post-cast rolling, extruding, re-forming or alloying of copper cathode but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9) . However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.






in relation to copper smelting o the addition of fluxes; ando the processing of sulphur compounds to produce sulphuric acid;

in relation to copper electrorefining o anode preparation, including any spent or reject copper anode reprocessing

which involves copper anode recovery for reuse in the activity;o remelting and casting of reject copper anode and cathode for use in the activity;o cathode stripping; ando electrowinning of waste copper concentrate solution from the electrorefining

process. the processing of residues and/or intermediate products in the activity, including

precious metals refineries; compression of air where this is consumed within the activity boundary; the production of oxygen or nitrogen where this is consumed within the activity

boundary; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.

90

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: – transportation of inputs used in the activity to storage at the same location as the activity;



emissions associated with the generation of electricity on the site where the activity is compounds;

the mining of copper ore; the refining and processing of copper ore to produce concentrated mineralised copper

compounds; mining and production of lime (calcium oxide compounds); mining and production of silicon dioxide (SiO2, silica); post cast rolling, extruding or reforming of copper metal which has a concentration

equal to or greater than 99.90 per cent copper with respect to mass; and remelting and casting of copper metal which has a concentration equal to or greater

than 99.9 per cent with respect to mass, and/or recycled copper metal except when recycling spent anodes or reject anodes/cathodes as described in the inclusions section.


This clause provides that the production of copper is classified as a highly emissions intensive activity.


This clause provides that the electricity baselines for calculating the amount of a liable entity’s exemption in respect of the production of copper activity are: for copper cathode produced from concentrated mineralised copper compounds, 1.69

MWh per tonne of copper cathode that has a concentration of copper greater than 99.9 per cent;

for copper anode produced from concentrated mineralised copper compounds, 1.31 MWh per tonne of copper anode that has a concentration of copper between 99 per cent and 99.9 per cent (inclusive); and

for copper cathode produced from bought-in copper anode, 0.387 MWh per tonne of copper cathode that has a concentration of copper greater than 99.9 per cent.

The tonnage of the relevant outputs should be measured according to measurement techniques in practice in the industry.

To be eligible as relevant product:(a) the copper anode or copper cathode must be produced by carrying on the EITE activity; and(b) the copper anode or copper cathode must be of saleable quality.

The copper anode or copper cathode must have been produced by carrying on the activity as defined by clause 686 to be eligible as a relevant product.

The copper anode or copper cathode must be of saleable quality. This is defined by regulation 22C. Copper anode or copper cathode which is scrapped, recycled, remelted lost or discarded

91

are not to be included in the tonnes of relevant product. It is intended that only copper cathode meeting industry standard BS:EN 1978:1998 Copper cathode should be considered as a relevant copper cathode product.

It is intended that paragraphs 688(1)(c), 688(2)(c) and 688(3)(b) ensure that production of copper anodes and cathodes is not doubly allocated and each of the subclauses is mutually exclusive. In particular: paragraph 688(1)(c) ensures that subclause 688(1) relates to copper cathode which is

produced from concentrated mineralised copper compounds (whether across one or two sites) but does not relate to copper cathode attributable to ‘bought-in’ anodes (such as imported anodes or anodes produced at a site which is not part of the activity the subject of the application);

paragraph 688(2)(c) ensures that subclause 688(2) relates to copper anode that is not then transformed into copper cathode which is allocated under subclause 688(1) in relation to the application; and

paragraph 688(3)(b) ensures that subclause 688(3) relates to copper cathode which comes from copper anode that is not produced from carrying out the activity the subject of the application.

92

6.30 Carbamide (urea) production

Part 31 Production of carbamide (urea)Division 1 Production of carbamide (urea)Clause 689 – Production of carbamide (urea)

This clause provides that the production of carbamide (urea (CO(NH2)2)) is the chemical transformation of carbon dioxide (CO2) and anhydrous ammonia (NH3) to produce carbamide solution (urea (CO(NH2)2(aq))) that:(a) has a concentration of carbamide (urea (CO(NH2)2)) equal to or greater than 80 per cent; and(b) is subsequently used to produce either or both of:

(i) carbamide solutions (urea (CO(NH2)2(aq))); and(ii) saleable granulated, prilled or other solid forms of carbamide (urea (CO(NH2)2(s))).

The chemical transformation generally follows in accordance with the following chemical equations:

2NH3(l)+CO2(g) → H2NCOONH4(aq) +2CO(g)

H2NCOONH4(aq) → H2NCONH2(aq) +H2O(l)

The activity, as conducted during the period used to assess the eligibility of the activity, involved the reaction of carbon dioxide with anhydrous ammonia to create a carbamide (urea) solution, some of which was on-sold in varying concentrations. The majority of the carbamide (urea) solution was further evaporated and a solid granulated product produced.

It is intended that alternative processes of synthetic carbamide (urea) manufacture which use anhydrous ammonia as a feedstock are considered to satisfy the activity description.The activity description is not satisfied through the undertaking of the production of carbamide (urea) from a feedstock other than anhydrous ammonia.

The inputs of the activity have been defined to include anhydrous ammonia and carbon dioxide. The output of the activity may be in solid or solution form. Carbamide (urea) in solution is produced at various concentrations based on the final end product use. Carbamide (urea) in its solid form is sold in a variety of shapes the most common of which are granules and prills.

The activity does not include the upstream production of anhydrous ammonia or the downstream blending or converting of the urea into any products other than a carbamide (urea) solution or solid carbamide (urea) product. As such, the relevant site for the application is that where the carbamide (urea) solution, solid product, or both is actually produced and does not extend to separate sites which may conduct upstream production of anhydrous ammonia or the downstream production of products other than solid carbamide (urea) or carbamide (urea) solutions but not the activity as described. Generally, it is expected that where these upstream and downstream processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9) . However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.


93





production of nitrogen and oxygen consumed within the activity; solvent recovery system (or equivalent) used to recover the un-reacted or intermediary

gases; compression of anhydrous ammonia (NH3) and carbon dioxide (CO2) gases prior to

urea reactor; conversion of carbamide solution (CO(NH2)2(aq), Urea) with a concentration of

carbamide (CO(NH2)2, Urea) greater than or equal to 80 per cent with respect to mass to either granulated, prilled or other solid product form, or aqueous solution;




transportation of the output/s of the activity from storage at the same location as the activity;



production and liquefaction of anhydrous ammonia (NH3); and production of carbon dioxide (CO2).


This clause provides that the production of carbamide (urea) is classified as a moderately emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of carbamide (urea) is 0.285 MWh per tonne of 100 per cent equivalent carbamide (urea (CO(NH2)2)) on a dry weight basis.

The concentration of carbamide (urea) is measured using AOAC 978.02 Nitrogen (Total) inFertilizers; (or equivalent) and/or ISO 22241 Diesel engines - NOx reduction agent AUS 32 – Part 1: Quality requirements.

To be eligible as a relevant product, the 100 per cent equivalent carbamide (urea (CO(NH2)2)) must be:(a) contained within either of the following products:

94

(i) carbamide solutions (urea (CO(NH2)2(aq))); or(ii) saleable, granulated, prilled or other solid forms of carbamide (urea (CO(NH2)2(s))); and

(b) produced by carrying on the EITE activity; and(c) of saleable quality.

The carbamide (urea) must have been produced by carrying on the activity as defined by clause 689 to be eligible as a relevant product. For instance, where imported carbamide (urea) is blended with the product produced from the activity, only the domestically produced carbamide (urea) would be included in the tonnes of the relevant product.

The carbamide (urea) must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of carbamide (urea) which are recycled, lost or discarded are not to be included in the tonnes of dry weight relevant product.

95

6.31 Sodium carbonate (soda ash) and sodium bicarbonate production

Part 32 Production of sodium carbonate (soda ash) and sodium bicarbonateDivision 1 Production of sodium carbonate (soda ash) and sodium bicarbonateClause 692 – Production of sodium carbonate (soda ash) and sodium bicarbonate

This clause provides that the production of sodium carbonate (soda ash) and sodium bicarbonate is the chemical and physical transformation of calcium carbonate (CaCO3), sodium chloride (salt (NaCl)), ammonia (NH3) and carbon bearing materials (such as coke) into 1 or more of the following:(a) light sodium carbonate (light soda ash (Na2CO3)) which has a concentration of sodium carbonate (soda ash (Na2CO3)) equal to or greater than 98 per cent;(b) dense sodium carbonate (dense soda ash (Na2CO3)) which has a concentration of sodium carbonate (soda ash (Na2CO3)) equal to or greater than 97.5 per cent;(c) refined sodium bicarbonate (NaHCO3) which has a concentration of sodium bicarbonate (NaHCO3) equal to or greater than 95 per cent .

The activity as conducted during the period used to assess the eligibility of the activity involved the Solvay method.

The output of the activity is saleable light sodium carbonate (light soda ash (Na2CO3)) which has a concentration of light sodium carbonate greater than or equal to 98 per cent with respect to mass, dense sodium carbonate (dense soda ash (Na2CO3)) which has a concentration of dense sodium carbonate greater than or equal to 97.5 per cent with respect to mass; and/or refined sodium bicarbonate (NaHCO3) which has a concentration of refined sodium bicarbonate greater than or equal to 95 per cent with respect to mass.

The activity does not include the upstream mining and processing of limestone to produce sodium carbonate or sodium bicarbonate. As such, the relevant site for the application is that where the soda ash is actually produced and does not extend to separate sites which may conduct upstream or downstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9). However, it is understood that some upstream or downstream processing or ancillary processes may be conducted at the same site as an EITE activity and these processes do not impact the eligibility for exemptions of the EITE activity itself.






waste heat recovery within the activity boundary; steam consumed within the activity boundary; and off specification production (e.g. reject production) where this is not recycled in the

process.

96






extraction and crushing of calcium carbonate (CaCO3) and other raw materials; and production of calcium oxide (CaO, lime) that is not used to make light or dense sodium

carbonate or sodium bicarbonate;


This clause provides that the production of sodium carbonate (soda ash) and sodium bicarbonate is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of sodium carbonate (soda ash) and sodium bicarbonate is 0.130 MWh per tonne of saleable light sodium carbonate (light soda ash (Na2CO3)) which has a concentration of light sodium carbonate greater than or equal to 98 per cent with respect to mass, dense sodium carbonate (dense soda ash (Na2CO3)) which has a concentration of dense sodium carbonate greater than or equal to 97.5 per cent with respect to mass and/or refined sodium bicarbonate (NaHCO3) which has a concentration of refined sodium bicarbonate greater than or equal to 95 per cent with respect to mass.

The tonnage of the relevant soda ash should be measured accordingly to ordinary measurement rules applicable in the industry.

To be eligible as a relevant product, either or both of the sodium carbonate (soda ash) and sodium bicarbonate must be:

(a) light sodium carbonate (light soda ash (Na2CO3)) that:(i) has a concentration of sodium carbonate (soda ash (Na2CO3)) equal to or greater than 98 per cent; and(ii) is produced by carrying on the EITE activity; and(iii) is of saleable quality;

(b) dense sodium carbonate (dense soda ash (Na2CO3)) that:(i) has a concentration of sodium carbonate (soda ash (Na2CO3)) equal to or greater than 97.5 per cent; and(ii) is produced by carrying on the emissions-intensive trade-exposed activity and(iii) is of saleable quality;

(c) refined sodium bicarbonate (NaHCO3) that:(i) has a concentration of sodium bicarbonate (NaHCO3) equal to or greater than 95 per cent; and(ii) is produced by carrying on the EITE activity; and(iii) is of saleable quality.

97

The soda ash must be produced by carrying on the activity as defined by clause 692 to be eligible as a relevant product. An application may involve one, two or all three of the products in paragraphs (a) to (c) of clause 694. Where more than one of the products are involved, the annual tonnes of relevant product is the sum of the tonnes of all of the products which comply with paragraphs (a), (b) or (c) as appropriate. However, a particular tonne of product is not to be counted as a relevant product under more than one paragraph of clause 694.

The products in paragraphs (a) to (c) of clause 694 must be of saleable quality. This is defined by regulation 22C. In particular, the tonnes of product which are recycled, lost or discarded are not to be included in the tonnes of relevant product.

98

6.32 Ammonia production

Part 33 - Production of ammoniaDivision 1 - Production of ammoniaClause 695 - Production of ammonia

Clause 695 provides that the production of ammonia is the chemical transformation of hydrocarbons (or other hydrogen feedstock) to hydrogen (H2) that is subsequently reacted with nitrogen (N2), to produce anhydrous ammonia (NH3) which has a concentration of ammonia(NH3) by mass that is equal to or greater than 98 per cent.

The activity as conducted during the period used to assess the eligibility of the activity involved catalytic steam reforming of natural gas to produce hydrogen. This was then reacted with nitrogen (the Haber process) and liquefied to produce anhydrous ammonia (NH3) where the concentration of ammonia (NH3) is equal to or greater than 98 per cent with respect to mass. It is intended that the using an alternative hydrogen feedstock to produce ammonia would be considered to fit within the activity description.

The activity description is not satisfied through the undertaking of an activity which produces synthesis gas or hydrogen as the final product. The activity is also not considered to be conducted where the ammonia produced is not anhydrous and/or does not have a concentration of ammonia (NH3) that is equal to or greater than 98 per cent with respect to mass.

The inputs of the activity have been defined to include any hydrogen feedstock including hydrocarbons, water and any other source of hydrogen. Nitrogen is also defined as an input to the activity and this may be either as a refined product or as air.

The activity does not include either the upstream production of the hydrogen feedstock (such as natural gas extraction and distribution or synthesis gas production) or the downstream processing of the ammonia into ammonium nitrate, urea or any other product. As such, for the purpose of an application for exemption, the site undertaking the activity is that where the ammonia as defined is actually produced and does not extend to separate sites which may conduct feedstock preparation and processing or the production of downstream products.



o machinery used to move materials within and as part of the activity;o controls rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where they involve the recovery of materials for

re-use within the activity or are necessary for the activity to proceed as described; and


waste heat recovery within the activity boundary; steam consumed within the activity boundary; chemical transformation of a hydrocarbon feedstock (or other hydrogen feedstock) to

hydrogen (H2); the compression of air used within the activity boundary; the extraction of nitrogen from air, where the nitrogen is used within the activity

boundary;

99

the extraction of carbon dioxide gas (CO2) prior to the synthesis of ammonia gas (NH3); the liquefaction of anhydrous ammonia (NH3) product; and recycling of unreacted/intermediary ammonia synthesis gases.





electricity generation on the site where the activity is conducted; and downstream processing after the liquefaction of anhydrous ammonia (NH3) product.

Division 2 – Classification of activityClause 696 – Classification of activity

This clause provides that the production of ammonia is classified as a highly emissions-intensive activity.

Division 3 – Electricity baseline for calculating exemptionClause 697 – Electricity baseline for product

This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of ammonia is 0.224 MWh per tonne of 100 per cent equivalent anhydrous ammonia (NH3) where the concentration of ammonia (NH3) is equal to or greater than 98 per cent with respect to mass, and where the product is produced by carrying out the activity (as described in clause 695) and is of saleable quality (as defined in Regulation 22C).

100

6.33 Ammonium nitrate production

Part 34 - Production of ammonium nitrateDivision 1 - Production of ammonium nitrateClause 698 - Production of ammonium nitrate

Clause 698 provides that the production of ammonium nitrate is the chemical transformation of anhydrous ammonia (NH3) to ammonium nitrate solution (NH4NO3(aq)) which has a concentration of ammonium nitrate (NH4NO3) by mass of 60 per cent or more.

The activity as conducted during the period used to assess the eligibility of the activity involved the catalytic oxidisation of ammonia to create nitric acid in both medium and high pressure plants through the Ostwald process. The nitric acid was then reacted with ammonia to produce ammonium nitrate solution where the concentration of ammonium nitrate (NH4NO3) is equal to or greater than 60 per cent with respect to mass. In the eligibility period, these solutions were further processed to solutions with higher concentrations of ammonium nitrate, blended solution products or solid products (in a granulated, prilled or other form). However, this further processing was assessed as outside the activity boundary.

It is intended that alternative processes of low pressure catalytic oxidation or the Odda process (where nitric acid is reacted with phosphate rock) to produce ammonium nitrate solutions are considered to fit within the activity description.

The inputs of the activity have been defined to include anhydrous ammonia. The activity description is not satisfied through the undertaking of the manufacture of nitric acid (whether low or high purity) alone. It is also not satisfied where the ammonium nitrate solution does not have a concentration of ammonium nitrate that is equal to or greater than 60 per cent with respect to mass. Nitric acid is not an output of this activity.

The activity does not include either the upstream production of the anhydrous ammonia feedstock or the downstream processing of the ammonium nitrate solutions to solutions with higher concentrations of ammonium nitrate, blended solution products or solid products (in a granulated, prilled or other form). As such, for the purpose of an application for exemption, the site undertaking the activity is that where the ammonium nitrate solution with a concentration of ammonium nitrate (NH4NO3) equal to or greater than 60 per cent with respect to mass is actually produced and does not extend to separate facilities which may conduct anhydrous ammonia production or the production of downstream products from the ammonium nitrate solution but not the activity as described.






waste heat recovery within the activity boundary; steam consumed within the activity boundary; the compression of air for consumption in the activity;

101

production of nitric acid; and nitrogen consumed within the activity boundary.





electricity generation on the site where the activity is conducted; production and transport of liquid ammonia (NH3) to the site where the activity is

conducted; and downstream processing of the ammonium nitrate (NH4NO3(aq)) including, but not

limited to, prilling and granulation operations.


This clause provides that the production of ammonium nitrate is classified as a highly emissions-intensive activity.


This clause provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of ammonium nitrate is 0.114 MWh per tonne of 100 per cent equivalent ammonium nitrate (NH4NO3) with a concentration of ammonium nitrate equal to or greater than 60 per cent with respect to mass, and where the product is produced by carrying out the activity (as described in clause 698) and is of saleable quality (as defined in Regulation 22C).

102

6.34 Chlorine gas and sodium hydroxide (caustic soda) solution production

Part 35 – Production of chlorine gas and sodium hydroxide (caustic soda) solutionDivision 1 - Production of chlorine gas and sodium hydroxide (caustic soda) solutionClause 701 – Production of chlorine gas and sodium hydroxide (caustic soda) solution

Clause 701 provides that the production of chlorine gas and sodium hydroxide solution (caustic soda solution (NaOH(aq))) is the chemical transformation of sodium chloride solution (NaCl(aq), brine) to chlorine (Cl2(1,g)) and sodium hydroxide solution (caustic soda solution (NaOH(aq))) that has a concentration of sodium hydroxide (NaOH) of 14 per cent or more.

Clause 701 (2) provides for the ratio of sodium hydroxide to chlorine, with the production of sodium hydroxide (NaOH) being 1:1.13 times the production of chlorine (Cl2). Clause 701(3) states the following chemical reaction must be involved in the chemical transformation:

2NaCl(aq) + 2H2O(l) → 2NaOH(aq) + Cl2(g) + H2(g)

The activity as conducted during the period used to assess the eligibility of the activity involved the electrolysis of a brine solution using membrane cell technology to produce hydrogen and chlorine gases and sodium hydroxide solution (NaOH(aq), caustic soda solution). In this process, the conditions of the concentration of sodium hydroxide (NaOH) being equal to or greater than 14 per cent with respect to mass and the stoichiometric ratio means that sodium hydroxide (NaOH) production is 1:1.13 times the production of chlorine (Cl2) by mass were both met. The hydrogen gas produced was either used as a feedstock for the downstream production of hydrochloric acid, as a fuel to generate steam or vented to atmosphere.

It is intended that alternative processes of the diaphragm or mercury cell (where environmental legislation permits the use of this technology) to produce chlorine gas and sodium hydroxide solution would be considered to fit within the activity description.

The activity description is not satisfied through the undertaking of the production of brine, nor is it satisfied by undertaking the downstream processing of the chlorine gas or sodium hydroxide solutions.

The inputs of the activity have been defined to include sodium chloride solution or brine in concentrations as needed for the production process. The outputs of the activity are chlorine (Cl2) and sodium hydroxide solution (NaOH(aq), caustic soda solution) where the concentration of sodium hydroxide (NaOH) is equal to or greater than 14 per cent with respect to mass. The final chlorine product may be in a liquid or gaseous form.

The activity does not include the upstream extraction, mining and processing of salt or the production of the brine solution. Further, the activity does not include the downstream manufacture of products produced from the chlorine and sodium hydroxide solution, or the processing of any by-products form the production of this activity.



machinery used to move materials within and as part of the activity; controls rooms, laboratories, maintenance workshops; machinery used to create non-electrical energy for use in the activity; the processing of by-products where it involves the recovery of materials for re-use

within the activity or it is necessary for the activity to proceed as described; and

103

onsite processing of by-products and waste materials from the activity to comply with Commonwealth, State or Territory obligations.

waste heat recovery within the activity boundary; steam consumed within the activity boundary; nitrogen used within the activity boundary; liquefaction of the chlorine gas; and drying of the caustic soda solution to saleable concentration.




complementary activities, such as packaging, head office, administrative and marketing operations, either at the same location as the activity or elsewhere; and

emissions associated with the generation of electricity on the site where the activity is conducted.


This clause provides that the production of chlorine gas and sodium hydroxide solution is classified as a highly emissions-intensive activity.

Division 3 - Electricity baseline for calculating exemptionClause 703 – Electricity baseline for product

Clause 703 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of chlorine and sodium hydroxide solution is 2.67 MWh per tonne of 100 per cent equivalent sodium hydroxide solution on a dry weight basis.

The measurement of the sodium hydroxide might be in regard to the American Water Works Association standard B501-08 (ANSI/AWWA B501-08) or Australian/International equivalent.

To be eligible as a relevant product, the 100 per cent equivalent sodium hydroxide must be: on a dry weight basis; not recycled back into the EITE activity (such as a stream of sodium hydroxide solution

recycled back into the chemical treatment step); and is contained within sodium hydroxide solution that is produced by carrying on the EITE

activity.

The sodium hydroxide must have been produced by carrying on the activity (as defined by clause 701) to be eligible as a relevant product. Products produced from the sodium hydroxide solution such as sodium hypochlorite are not considered to be relevant products however it is expected that the tonnes of sodium hydroxide reported might include some tonnes of sodium hydroxide which is further reacted to produce alternative products.

104

6.35 Fused zirconia production

Part 36 - Production of fused zirconiaDivision 1 - Production of fused zirconiaClause 704 – Production of fused zirconia

Clause 704 provides that the production of fused zirconia is the physical and chemical transformation of zircon (ZrSiO4) by:

(a) the removal of silica (silicon dioxide (SiO2) using a reductant such as carbon); and(b) heating the zircon to its fusion point; to produce fused zirconia (zirconium dioxide (ZrO2) that has a concentration of zirconium dioxide (ZrO2) equal to or greater than 96 per cent.

The activity as conducted during the period used to assess the eligibility of the activity involved the removal of silica from zircon by reacting zircon with a source of carbon in an electric arc furnace and heating it to its fusion point at temperatures of around 2,800°C.

The activity description is not satisfied through the undertaking of mining and concentrating (including wet and dry concentrating and electrostatic separation) of zircon. However, the fact that a batch of fused zirconia does not have a level of purity equal to or greater than 96 per cent does not mean that the activity is not conducted at times when the purity is equal to or greater than 96 per cent in other batches.

The inputs of the activity have been defined to include any grade of zircon and a source of carbon such as coke or coal.

The output of this activity is saleable fused zirconia (zirconium dioxide, ZrO2) with a level of purity equal to or greater than 96 per cent. Silica fume is also produced as a by-product of the process.

The activity does not include the upstream extraction (mining) and separation of zircon from other minerals or the downstream crushing and milling of cast fused zirconia. As such, the relevant site for the application is that where the fused zirconia is actually produced and does not extend to separate sites which may conduct downstream or upstream processing but not the activity as described. Generally, it is expected that where these processes are carried out at separate sites those sites would not be regarded as carrying out the EITE activity for the purposes of subregulation 22A(9).




use within the activity or is necessary for the activity to proceed as described; o onsite processing of waste materials and by-products from the activity to

comply with Commonwealth, State or Territory obligations; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.

105






mining and concentrating (including wet and dry concentrating and electrostatic separation) of zircon (ZrSiO4); and

crushing and milling of cast fused zirconia (zirconium dioxide, ZrO2).


This clause provides that the production of fused zirconia is classified as a highly emissions-intensive activity.


Clause 706 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of fused zirconia is 6.07 MWh per tonne of fused zirconia with a purity equal to or greater than 96 per cent.

The tonnage of the relevant fused zirconia should be measured according to ordinary measurement rules applicable in the industry.

To be eligible for exemption, the fused zirconia must have been produced by carrying on the activity (as defined by clause 704) to be eligible as a relevant product. For example, where imported fused zirconia is blended with product produced from the activity, only the domestically produced fused zirconia would be included in the tonnes of the relevant product.

The fused zirconia must be of saleable quality (as defined by regulation 22C). In particular, the tonnes of fused zirconia which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

106

6.36 Iron ore pellet production

Part 37 - Production of iron ore pelletsDivision 1 - Production of iron ore pelletsClause 707 – Production of iron ore pellets

Clause 707 provides that the production of iron ore pellets is the physical and chemical transformation of iron ore to produce iron ore pellets for the production of steel, and where the iron ore pellets that have: a concentration of iron (Fe) is equal to or greater than 63 per cent with respect to mass;

and a concentration of alumina (Al203, aluminium oxide) is equal to or less than 2 per cent with

respect to mass; and a concentration of silicon dioxide (SiO2, silica) is equal to or less than 7 per cent with

respect to mass; and an average diameter of between 9 and 16 millimetres.

The activity as conducted during the period used to assess the eligibility of the activity involved the pelletising and hardening of concentrated magnetite (Fe3O4) to produce iron ore pellets. In this period by-products of the activity including chips and chunks of iron ore were also produced.

It is intended that alternative production processes using any source of iron ore, subject to the condition in paragraph 22A(1), to produce iron ore pellets would be considered to fit within the activity definition.

This activity is not satisfied through the undertaking of the production of other forms ofagglomerated iron ore including iron ore sinter or haematite benefaction.

The input of this activity is iron ore. For the purposes of this division, iron ore is given meaning by the conditions in paragraph 22A(1) and intended to include magnetite ore that has been concentrated and that may be in slurry form, or hematite ore that has been crushed to varying extents. Iron that has been semi-processed as per the requirements in paragraph 22A(1) is not to be treated as being input of this activity.

The output of this activity is iron ore pellets that satisfy the conditions as outlined in paragraph 22A(1).

The activity does not include the upstream extraction or production of the iron ore concentrate to the activity including the production of magnetite concentrate. Further, the activity does not include the downstream processing of iron ore pellets including pig iron production or the recycling or further processing of the by-product iron ore chips and chunks, from the production of iron ore pellets. As such, the relevant site for the purpose of the application is where the iron ore pellets are actually produced and does not extend to separate facilities which may conduct upstream or downstream processing of either the iron ore product or any relevant by-products but not the activity as described.


the direct emissions from, and electricity use of, machinery, equipment, facilities and processes which are integral to, and essential for, the physical and/or chemical transformation described in the activity definition, including, for example:

o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;

107

o machinery used to create non-electrical energy for use in the activity;– the processing of by-products where they involve the recovery of materials

o for re-use within the activity or are necessary for the activity to proceed aso described; ando onsite processing of by-products and waste materials from the activity to

comply with Commonwealth, State or Territory obligations; emissions associated with the production of hot air for use in furnace operations; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.






the production of iron ore concentrate.


This clause provides that the production of iron ore pellets is classified as a moderately emissions-intensive activity.


Clause 709 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of iron ore pellets is 0.0498 MWh per tonne of iron ore pellets on a dry weight basis.

To be eligible for exemption, the iron ore pellets must have been produced by carrying on the activity (as defined by clause 707) and must be of saleable quality (as defined by regulation 22C). In particular, the tonnes of iron ore pellets which are scrapped or recycled are not to be included in the tonnes of relevant product. Similarly, a tonne of iron ore pellets that is included in the basis for calculating exemption for this activity is not to be also included as the basis for calculating exemption under the separate activity of integrated iron and steel.

108

6.37 Liquefied natural gas production

Part 38 - Production of liquefied natural gasDivision 1 - Production of liquefied natural gasClause 710 – Production of liquefied natural gas

Clause 710 provides that the production of liquefied natural gas (LNG) is the physical transformation of natural gas (in a gaseous state on entering the activity) to liquefied natural gas which has a methane content by mass of 70 per cent or more (in a liquid state on leaving the activity).

The activity as conducted during the period used to assess the eligibility of the activity involved the processing and subsequent liquefaction of natural gas that was taken from a petroleum reservoir. The gas underwent a feed treatment stage where hydrogen sulfide, carbon dioxide, mercaptans, mercury and water were removed from the raw gas product. Following such processing, the predominantly methane mixture was then liquefied through compression and temperature reduction in a liquefaction train to -161°C. Hydrocarbons contained in the natural gas stream that was in part taken to be liquefied in LNG were also produced into other products such as condensate, domestic gas and liquefied petroleum gas. However, the production processes associated with these other products were not assessed as part of the activity.

It is intended that alternative forms of production that do not require the feed treatment stage would be considered to fit within the activity definition, so long as at least liquefaction of natural gas takes place at the facility.

This activity is not satisfied through the undertaking of natural gas extraction and production, or through liquefied natural gas regasification. The activity is also not satisfied where the natural gas being processed remains in a gaseous state or has a concentration of methane (CH4) that is less than 70 per cent with respect to mass.

The inputs of the activity have been defined to include natural gas in a gaseous state. This may be natural gas sourced from a petroleum reservoir as during the period used to assess eligibility or from an alternative source such as coal seam methane wells or from a domestic gas pipeline.

The outputs of the activity are defined as tonnes of LNG where the concentration of methane is equal to or greater than 70 per cent with respect to mass. The measurement of this output is expected to be conducted so that it does not include any tonnes of LNG that boil off in conveying the LNG to a transportation vessel or storage facility. The measurement of the output for the issue of free carbon units is by a tonne of LNG that is transported away from the facility, as a gas or a liquid, from the facility where the natural gas was liquefied. Audited delivery statements or contractual arrangements associated with the delivery or loading of LNG into a pipeline, truck, ships or other transportation vessels are suitable documents for calculating the produced LNG in this activity.

The activity does not include the upstream extraction or production of the natural gas to the activity. Further, the activity does not include the downstream processing of the LNG including transportation, distribution or regasification, or the processing of any by-products from the production of LNG including condensate, domestic gas and liquefied petroleum gas.


109





waste heat recovery within the activity boundary;– steam consumed within the activity boundary;

the treatment of the natural gas that is subsequently transformed into liquefied natural gas, including:

o water removal (such as emissions associated with the separation of water from the natural gas and flaring of entrained hydrocarbons in this water);

o removal of acid gases (such as carbon dioxide and hydrogen sulphide);o dehydration and mercury removal; ando any flaring or venting of greenhouse gases and any fugitive emissions (for

example from, but not limited to compressor seals, valves etc) associated with that treatment or the liquefaction process;

the short-term buffer storage of liquefied natural gas where the volume of that buffer storage is designed specifically for the purpose of enabling efficient loading into the transportation system, such as ocean going tankers, at a frequency and rate determined by the facility’s off-take requirements;

the supply of utilities such as, but not limited to, compressed air, nitrogen, steam and water where these are used in support of the activity and within the activity boundaries;

the regeneration of any catalysts or solvents used within the activity boundary; and the storage and loading of the liquefied natural gas into a medium of transportation

such as ocean going tankers, pipeline system or to a piece of equipment which will consume the natural gas.





emissions associated with the generation of electricity on the site where the activity is conducted


This clause provides that the production of liquefied natural gas is classified as a moderately emissions-intensive activity.


110

Clause 712 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of liquefied natural gas is 0.0640 MWh per tonne of LNG that has a concentration of methane equal to or greater than 70 per cent with respect to mass.

To be eligible for exemption, the LNG must have been brought to the liquefied state by carrying on the activity as defined by clause 710 and must be transported away from the facility. LNG that has been returned to the site does not constitute eligible tonnes of relevant product.

111

6.38 Magnetite concentrate production

Part 39 - Production of magnetite concentrateDivision 1 - Production of magnetite concentrateClause 713 – Production of magnetite concentrate

Clause 713 provides that the production of magnetite concentrate is defined as the physical transformation of magnetite ore (ore containing Fe3O4) to produce saleable magnetite (Fe3O4) concentrate that: has the concentration of iron (Fe) at least 60 per cent on a dry-weight basis with respect to

mass; and at least 80 per cent of the material has a particle size of less than 75 microns.

The activity as conducted during the period used to assess the eligibility of the activity involved the onsite milling of magnetite ore, the magnetic separation of the magnetite particles from the ore and concentrate thickening. In this period no saleable by-products of the activity were produced.

It is intended that the alternative production processes which produce magnetite concentrate as defined would be considered to fit within the activity definition.

This activity is not satisfied through the undertaking of magnetite mining and extraction, haematite benefaction, concentration of alternative iron ores and magnetite concentrate where the conditions outlined in clause 713 are not satisfied.

The inputs to this activity are any ore which contains magnetite (Fe3O4) and has the key property of ferrimagnetism as described in the note in clause 713.

The output of this activity is magnetite concentrate that satisfies the conditions as outlined in clause 713. Magnetite concentrate of saleable quality may be taken to include magnetite concentrate in a slurry form, whether or not this product is sold in this form to a third party or transferred internally. However, the basis of issue of free carbon units for the production of magnetite concentrate is by a tonne of 100 per cent equivalent iron (Fe) contained in the saleable magnetite concentrate and other requirements listed in clause 713.

The activity does not include the upstream extraction or production of the input to the activity including the mining and extraction of ore and the crushing and grinding of the ore that is not contiguous with the magnetite concentrate production process. Further, the activity does not include the downstream processing of magnetite concentrate, included the dewatering of magnetite concentrate slurry or the production of iron ore pellets. As such, the relevant site for the purpose of the application is that where the magnetite concentrate is actually produced and does not extend to separate sites which may conduct upstream or downstream processing of either the magnetite concentrate or any relevant by-products but not the activity as described.

NOTE - any magnetite concentrate that is included as relevant product for exemption under the magnetite concentrate activity is not also able to be the same magnetite concentrate that is further refined to produce ferrovanadium under the ‘production of ferrovanadium’ activity.



o machinery used to move materials within and as part of the activity;

112

o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity;o the processing of by-products where it involves the recovery of materials for

reuse within the activity or is necessary for the activity to proceed as described; and


waste heat recovery within the activity boundary; steam consumed within the activity boundary; the onsite processing and treatment of water and wastewater; the onsite processing and treatment of tailings; and crushing and grinding that is contiguous with the magnetite concentrate production

process.






mining, extraction and the delivery of iron ore to storage at the same location as the activity;

crushing and grinding that is not contiguous with the magnetite concentrate production process;

the concurrent preparation, separation and/or concentration of haematite or other ores for the refinement of iron ore or production of other iron ore concentrates other than magnetite concentrates within parts of the same equipment and process circuit such as, but not limited, to crushing and screening equipment; and

the transportation of magnetite iron ore concentrate slurry and water to and/or from the activity.


This clause provides that the production of magnetite concentrate is classified as a moderately emissions-intensive activity.

Division 3 - Electricity baseline for calculating exemptionClause 715 - Electricity baseline for product

Clause 715 provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of magnetite concentrate is 0.0826 MWh per tonne of 100 per cent equivalent iron contained within magnetite that has a concentration of iron equal to or greater than 60 per cent on a dry weight basis and where at least 80 per cent of the material has a particle size of less than 75 microns.

To be eligible for exemption, the iron ore pellets must have been produced by carrying on the activity (as defined by clause 713) and must be of saleable quality (as defined by regulation 22C).

113

6.39 Glass beads production

Part 40 - Production of glass beadsDivision 1 - Production of glass beadsClause 716 - Production of glass beads

Clause 716 provides that the production of glass beads is the physical and chemical transformation of recycled materials (such as cullet) and/or silicon dioxide (SiO2, silica), sodium carbonate (Na2CO3, soda ash) and other raw materials through a crushing (of any relevant recycled materials), sieving and firing process into saleable solid spherical glass beads where the refractive index is greater than or equal to 1.50 and the size is smaller than2 millimetres (mm).

The activity as conducted during the period used to assess the eligibility of the activity involved the onsite crushing, sieving and firing of recycled materials (such as cullet). It is intended that other production processes to produce glass beads, including the onsite sieving and firing of silicon dioxide, sodium carbonate and other raw materials, would be considered to fit within the activity definition.

The activity description is not satisfied through the undertaking of the extraction and crushing of silica, production of sodium carbonate soda ash and other raw materials.

The inputs of the activity have been defined to include recycled materials (such as cullet) and/or silica, soda ash and other raw materials.

The output of this activity is saleable glass beads. By-products of the activity include glass grains.

The activity does not include the upstream extraction or production of the input to the activity including the production of silica, crushing of silica, production of soda ash or sorting of cullet.

The activity also does not include the downstream processing of glass beads (such as secondary coating). As such, the relevant facility is that where the glass beads are actually produced and does not extend to separate facilities which may conduct either extraction of silica, sorting of cullet, secondary processing or distribution of glass beads products but not the activity as described.






production of compressed air consumed within the activity; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.

114





extraction and crushing of silicon dioxide (SiO2, silica), production of sodium carbonate (Na2CO3, soda ash) and other raw materials;

collection of external recycled cullet from a location that is not the same as the activity and the subsequent processing and transport of the cullet not at the same location as the activity; and

downstream processing of glass beads.


This clause provides that the production of glass beads is classified as a highly emissions-intensive activity.


Clause 718 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of glass beads is 0.400 MWh per tonne of solid glass beads on a dry weight basis that have a refractive index greater than or equal to 1.50 and are smaller than 2 mm where the product is produced by carrying out the activity (as described in clause 716) and is of saleable quality (as defined in Regulation 22C of the Principal Regulations).

The measurement of the relevant glass beads should be measured according to the accepted industry practice for production that conforms to AS/NZS 2009:2006 Glass beads for pavement-marking materials or other relevant industry standard.

115

6.40 Sodium silicate glass production

Part 41 - Production of sodium silicate glassDivision 1 - Production of sodium silicate glassClause 719 - Production of sodium silicate glass

Clause 719 provides that the production of sodium silicate glass is the physical and chemical transformation of silicon dioxide (SiO2, silica), sodium carbonate (Na2CO3, soda ash) into saleable sodium silicate glass where the concentration of sodium silicate (Na2SiO3) is equal to or greater than 99 per cent with respect to mass.

The activity as conducted during the period used to assess the eligibility of the activity involved the mixing of high purity sand and soda ash in a high temperature furnace.

The inputs of the activity have been defined to include silica and soda ash.

The activity does not include the upstream extraction and crushing of silica, production of soda ash and other raw materials. The activity also does not include the downstream processing of sodium silicate glass, such as the production of sodium silicate liquid (water glass) or sodium silicate derivatives. As such, the relevant facility is that where the sodium silicate glass is actually produced and does not extend to separate facilities which may conduct either extraction of silica, sorting of cullet, secondary processing or distribution of sodium silicate glass products but not the activity as described.






production of compressed air consumed within the activity; waste heat recovery within the activity boundary; and steam consumed within the activity boundary;





emissions associated with the generation of electricity on the site where the activity is conducted1;

extraction and crushing of silicon dioxide (SiO2, silica), production of sodium carbonate (Na2CO3, soda ash) and other raw materials; and

116

downstream processing of sodium silicate glass, such as the production of sodium silicate liquid (water glass) or sodium silicate derivatives.


This clause provides that the production of sodium silicate glass is a highly emissions-intensive activity.


Clause 721 provides that the electricity baseline for calculating the amount of a liable entity’s exemption in respect of the production of sodium silicate glass is 0.0205 MWh per tonne of sodium silicate glass on a dry weight basis where the glass has a concentration of sodium silicate (Na2SiO3) equal to or greater than 99 per cent with respect to mass and where the product is produced by carrying out the activity (as described in clause 721) and is of saleable quality (as defined in Regulation 22C).

The measurement of the relevant sodium silicate glass should be measured according to the accepted industry practice for production that conforms to ISO 1686:1976 Sodium and potassium silicates for industrial use - Samples and methods of test - General, ISO 1689:1976Sodium and potassium silicates for industrial use - Calculation of the ratio : silicon dioxide/sodium oxide or silicon dioxide/potassium oxide, and ISO 1690:1976 Sodium and potassium silicates for industrial use - Determination of silica content - Gravimetric method by insolubilization.

117

6.41 Polymer grade propene (polymer grade propylene) production

Part 42 - Production of polymer grade propene (polymer grade propylene)Division 1 - Production of polymer grade propene (polymer grade propylene)Clause 722 – Production of polymer grade propene (polymer grade propylene)

Clause 722 provides that the production of polymer grade propene is the physical transformation of hydrocarbons that have a concentration of propene (C3H6, propylene) between 45 per cent and 85 per cent with respect to mass (inclusive) to polymer grade propene (C3H6, polymer grade propylene) that has a concentration of propene (C3H6, propylene) greater than or equal to 98 per cent with respect to mass.

The activity as conducted during the period used to assess the eligibility of the activity involved the use of a splitter to produce polymer grade propylene from refinery grade propylene.

The activity description is not satisfied through the undertaking of upstream manufacture and preparation of the refinery grade propene (refinery grade propylene) input stream.

The inputs of the activity have been defined to include refinery grade propylene, bought-in steam, bought-in quench water, and bought-in electricity.

The output of this activity is saleable 100 per cent equivalent propene contained within polymer grade propene that has a concentration of propene greater than or equal to 98 per cent with respect to mass. By-products of the activity include liquefied petroleum gas (LPG).

The activity does not include the upstream manufacture and preparation of the refinery grade propene (refinery grade propylene) input stream. The activity also does not include the downstream processing of liquefied petroleum gas (LPG) and downstream processing of the polymer grade propene output proceeding the propane/propene splitting column including but not limited to the production of polypropylene. As such, the relevant facility is that where the polymer grade propylene is actually produced and does not extend to separate facilities which may conduct either the production of refinery grade propylene, secondary processing or distribution of polymer grade propylene products but not the activity as described.






production of compressed air, nitrogen and oxygen; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.


118





emissions associated with the production of the hydrocarbon input stream to the process including but not limited to emissions attributed to petroleum refining or production of ethene (C2H4, ethylene) as determined by the activity definitions pertaining to these activities;

downstream processing of liquefied petroleum gas (LPG); upstream manufacture and preparation of the refinery grade propene (refinery grade

propylene) input stream; and downstream processing of the polymer grade propene (C3H6, polymer grade

propylene) output proceeding the propane/propene (C3H6, polymer grade propylene) splitting column including but not limited to the production of polypropylene.


This clause provides that the production of polymer grade propene is classified as a highly emissions-intensive activity.


Clause 724 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of polymer grade propene is 0.220 MWh per tonne of 100 per cent equivalent propene (C3H6, propylene) contained within polymer grade propene (C3H6, propylene) that has a concentration of propene greater than or equal to 98 per cent with respect to mass produced by carrying on the activity (as defined by clause 723).

The measurement of the relevant polymer grade propylene should be measured according to the accepted industry practice for production that conforms to ASTM D2163 - 07 Standard Test Method for Determination of Hydrocarbons in Liquefied Petroleum (LP) Gases andPropane/Propene Mixtures by Gas Chromatography and ISO 7941:1988 Commercial propane and butane – Analysis by gas chromatography.

119

6.42 Rolled aluminium production

Part 43 - Production of rolled aluminiumDivision 1 - Production of rolled aluminiumClause 725 – Production of rolled aluminium

Clause 725 provides that the production of rolled aluminium is the physical and chemical transformation of primary aluminium metal and/or secondary aluminium metal with alloying metals into coiled aluminium sheet with a concentration of aluminium equal to or greater than 90 per cent by mass, and with a thickness equal to or less than 6 millimetres (mm).

The activity as conducted during the period used to assess the eligibility of the activity involved casting of primary aluminium into rolling ingots, and the hot and cold rolling of ingots into coiled aluminium sheet.

The activity description is not satisfied through the undertaking of mining of bauxite or refining of alumina or aluminium smelting.

The inputs of the activity have been defined to include both primary aluminium metal and secondary aluminium metal with alloying metals. The output of this activity is coiled aluminium sheet of saleable quality with a concentration of aluminium equal to or greater than 90 per cent by mass, and with a thickness equal to or less than 6 millimetres.

The activity does not include the production of primary aluminium metal. The activity also does not include melting or casting of secondary aluminium, or any further processing of aluminium metal beyond the activity boundary, including cleaning, coating or slitting of coiled aluminium, or additional rolling of aluminium coil to produce saleable aluminium foil with a thickness of 0.180 millimetres or less. As such, the relevant facility is a facility where the rolled aluminium is actually produced and does not extend to separate facilities which may conduct either alumina refining or aluminium smelting, or secondary processing or distribution of rolled aluminium products but not the activity as described.






production of nitrogen, oxygen, and argon consumed within the activity boundary; production of compressed air consumed within the activity boundary; waste heat recovery within the activity boundary; hot and cold rolling; thermal processes to heat rolling ingots and coils; melting and casting of solid primary aluminium ingot into rolling ingots to be used in the

rolling process; and melting and casting of aluminium recovered through the casting and rolling process for

re-use in the activity.

120





melting of secondary aluminium; casting of secondary aluminium; the production of primary aluminium metal, including all processes described in the

aluminium smelting activity definition (which includes casting); the production of any other inputs to the activity, such as chlorine (Cl) and alloys; further downstream processing of aluminium metal beyond the boundary of this

activity, including cleaning, coating or slitting of coiled aluminium to produce saleable aluminium coil; and

additional rolling of aluminium coil to produce downstream products such as saleable aluminium foil with a thickness of 0.180 millimetres or less.


This clause provides that the production of rolled aluminium is classified as a highlyemissions-intensive activity.


Clause 727 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of rolled aluminium is 0.982 MWh per tonne of coiled aluminium sheet of saleable quality with a concentration of aluminium equal to or greater than 90 per cent by mass, and with a thickness equal to or less than 6 millimetres.

To be eligible for exemption, the rolled aluminium must have been produced by carrying on the activity (as defined by clause 725) to be eligible as a relevant product and must be of saleable quality (as defined by regulation 22C). In particular, the tonnes of rolled aluminium which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

121

6.43 Reconstituted wood-based panel manufacturing

Part 44 - Manufacture of reconstituted wood-based panelsDivision 1 - Manufacture of reconstituted wood-based panelsClause 728 - Manufacture of reconstituted wood-based panels

Clause 728 provides that the manufacture of reconstituted wood-based panels is the physical or chemical transformation of wood, including wood particles and residues (such as chips, savings, sawdust) into a reconstituted wood-based panel (such as particleboard and medium density fibreboard) with a density of greater than 500 kilograms per cubic metre (kg/m3) and where the individual wood particles or fibres in the wood based panel have an average maximum dimension of no greater than 30 millimetres (mm).

The inputs of the activity have been defined to include woodchips, sawdust and wood-shavings.

The outputs of this activity are saleable raw reconstituted wood-based panel with a density of greater than 500 kg/m3 and where the wood-based panels have an average maximum dimension of no greater than 30 mm.

The activity does not include the upstream preparation of raw log, such as de-barking and chipping or the downstream processing of raw board into subsequent products. As such, the relevant facility is that where the output is actually produced and does not extend to separate facilities that may conduct upstream or downstream processing but not the activity as described.






waste heat recovery within the activity boundary; steam consumed within the activity boundary; on site secondary resizing and reprocessing including milling, flaking, screening, and

washing of wood particles and wood residues (such as chips, shavings, sawdust) to produce wood flakes (flakes shall have an average length no greater than 30 mm and average width no greater than 25 mm and an average thickness no greater than 2.0 mm) and sized particles for the purpose of wood panel manufacture; and

sanding of wood-based panels, trimming and sawing into standard panel sizes.




122



all forestry operations including establishment, maintenance and harvesting; wood preparation of raw log including de-barking and chipping; further processing of raw board into subsequent products (such as speciality cutting,

veneering, laminating, moulding, furniture and joinery work); and the generation of steam for use outside the activity.


This clause provides that the manufacture of reconstituted wood-based panels is classified as a moderately emissions-intensive activity.


Clause 730 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the manufacture of reconstituted wood-based panels is 0.372 MWh per tonne of raw reconstituted wood-based panel that has a density of greater than 500 kg per cubic metre and has individual wood particles or fibres with an average maximum dimension of no more than 30 mm where the product is produced by carrying out the activity (as described in clause 728) and is of saleable quality (as defined in Regulation 22C of the Principal Regulations).

The reconstituted wood-based panels must be of saleable quality. Wood panels that are discarded or reprocessed because they do not meet output specifications are not of saleable quality. Wood panels of saleable quality do not include cover boards and other materials used for packaging.

123

6.44 Coke oven coke production

Part 45 Production of coke oven cokeDivision 1 Production of coke oven cokeClause 731 Production of coke oven coke

Clause 731 provides that the production of coke oven coke is the physical and chemical transformation of coal into coke oven coke, which proceeds at a temperature above 900oC, and where at least 80 per cent of the coke oven coke exhibits a Coke Strength after Reaction (CSR) value above 50 per cent and a Coke Reactivity Index (CRI) value of less than 40 per cent.

The activity as conducted during the period used to assess the eligibility of the activity involved the onsite crushing, grinding, conditioning, charging, heating and quenching of coal to produce coke oven coke.

The inputs of the activity have been defined to include coal. The output of this activity is saleable coke oven coke which exhibits a CSR value above 50 per cent and a CRI value of less than 40 per cent produced by the carrying on of the activity.

The activity does not include the upstream mining and extraction of coal.



o machinery used to move materials within and as part of the activity;o machinery used to create non-electrical energy for use in the activity;o control rooms, laboratories, maintenance workshops;o the processing of by-products where they involve the recovery of materials for



the grinding and conditioning of coal that occurs on-site prior to charging in the coke ovens; and

those on-site processes that involve transforming the hot coke taken from the coke ovens to a saleable coke product.





the mining and extraction of coal.


124

This clause provides that the production of coke oven coke is classified as a highly emissions-intensive activity.


Clause 733 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of coke oven coke is 0.0109 MWh per tonne of dry weight saleable coke oven coke where at least 80 per cent of production exhibits aCSR value above 50 per cent and a CRI value of less than 40 per cent (as described in clause 731) and is of saleable quality (as defined in Regulation 22C of the Principal Regulations).

The measurement of the relevant coke oven coke should be measured according to the accepted industry practice for production that conforms to: ASTM D3173 - 03(2008) Standard Test Method for Moisture in the Analysis Sample of

Coal and Coke or AS1038.3 Pt 3 S2 - Determination of Moisture; AS 1038.4-2006 Coal and coke - Analysis and testing - Coke - Proximate analysis; AS 4264.2-1996 Coal and coke - Sampling - Coke - Sampling procedures; ASTM D5341 - 99(2010)e1 Standard Test Method for Measuring Coke Reactivity Index

(CRI) and Coke Strength After Reaction (CSR); AS 1038.2-2006 Coal and coke - Analysis and testing - Coke - Total moisture; AS 1038.13-1990 Coal and coke - Analysis and testing - Tests specific to coke; AS 1038.5-1998 Coal and coke - Analysis and testing - Gross calorific value; AS 1038.6.1-1997 Coal and coke - Analysis and testing - Higher rank coal and coke - Ultimate analysis - Carbon and hydrogen; or the above referenced standards as updated from time to time.

The coke oven coke produced in this activity is not a relevant product for the emissions-intensive trade-exposed activity of integrated iron and steel manufacturing. As such, the coke oven coke produced in this activity is not eligible for exemption under the integrated iron and steel activity.

To be eligible for exemption, the coke oven coke must have been produced by carrying on the activity (as defined by clause 345) to be eligible as a relevant product. For example, if imported coke oven coke is blended with product produced from the activity, only the domestically produced coke oven coke would be included in the tonnes of the relevant product.

The coke oven coke must be of saleable quality (as defined in Regulation 22C of the PrincipalRegulations). In particular, the tonnes of coke oven coke which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

125

6.45 Hydrogen peroxide production

Part 46 Production of hydrogen peroxideDivision 1 Production of hydrogen peroxideClause 734 Production of hydrogen peroxide

Clause 734 provides that the production of hydrogen peroxide is the chemical transformation of hydrogen (H) feedstocks and oxygen (O) feedstocks to produce a crude aqueous hydrogen peroxide solution where the concentration of hydrogen peroxide (H2O2(aq)) is equal to or greater than 39 per cent with respect to mass, and subsequent production of saleable aqueous hydrogen peroxide solutions where the concentration of hydrogen peroxide (H2O2(aq)) is equal to or greater than 34 per cent with respect to mass.

The activity as conducted during the period used to assess the eligibility of the activity involved the production of hydrogen using a natural gas steam reformer, the production of crude hydrogen peroxide using the auto oxidation process and the purification of the crude hydrogen peroxide into saleable aqueous hydrogen peroxide solution.

The inputs of the activity have been defined to include hydrogen and oxygen. The output of this activity is saleable aqueous hydrogen peroxide solution.






production of hydrogen consumed within the activity; compression of air consumed within the activity; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.


o transportation of input/s used in the activity to storage at the same location as the activity;

o transportation of the output/s of the activity from storage at the same location as the activity;

o complementary activities, such as packaging, head office, administrative and marketing operations, either at the same location as the activity or elsewhere; and

o emissions associated with the generation of electricity on the site where the activity is conducted


126

This clause provides that the production of hydrogen peroxide is classified as a moderately emissions-intensive activity.


Clause 736 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of hydrogen peroxide is 0.858 MWh per tonne of100 per cent equivalent hydrogen peroxide in saleable aqueous hydrogen peroxide of at least34 per cent with respect to mass (as described in clause 734). The measurement of the relevant aqueous hydrogen peroxide solution should be measured according to the accepted industry practice for hydrogen peroxide production.

To be eligible for exemption, the aqueous hydrogen peroxide solution must have been produced by carrying on the activity (as defined by clause 734) to be eligible as a relevant product. For example, if imported saleable aqueous hydrogen peroxide solution is blended with the product produced from the activity, only the domestically produced hydrogen peroxide would be included in the tonnes of the relevant product. Saleable aqueous hydrogen peroxide solution that is purified from crude aqueous hydrogen peroxide solution that is not produced within the activity is also not eligible for exemption.

The aqueous hydrogen peroxide solution must be of saleable quality (as defined in Regulation22C of the Principal Regulations). In particular, the tonnes of hydrogen peroxide solution which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

127

6.46 Ceramic floor and wall tile production

Part 47 Production of ceramic floor and wall tilesDivision 1 Production of ceramic floor and wall tilesClause 737 – Production of ceramic floor and wall tiles

Clause 737 provides that the production of ceramic floor and wall tiles is the physical and chemical transformation of raw clay and other raw materials, such as feldspar and quartz, into saleable ceramic floor and wall tiles. The tiles that are produced by undertaking the activity conform to the international standard of ISO 13006:2012 (issued by the InternationalOrganisation of Standardization) as in force at the time the tiles are produced, including updates to this standard, or an equivalent standard.

The activity as conducted during the period used to assess the eligibility of the activity involved the onsite grinding and milling of clay and raw materials to produce tile composite; tile rolling, pressing and cutting; preparation and application of glaze and other tile decorating; and operation of kilns and spray dryers to produce ceramic floor and wall tiles.

The inputs of the activity have been defined to include clay and other raw materials. The output of this activity is saleable ceramic floor and wall tiles that conform to ISO 13006:2012 as in force at the time the tiles are produced, or an equivalent standard.

The activity does not include the upstream mining and extraction of input materials such as clay, feldspar and quartz. The activity also does not include the production of glaze.



machinery used to move materials within and as part of the activity; control rooms, laboratories, maintenance workshops; machinery used to create non-electrical energy for use in the activity; the processing of by-products where it involves the recovery of materials for re-use within

the activity or is necessary for the activity to proceed as described; and onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations; waste heat recovery within the activity boundary; steam consumed within the activity boundary; onsite grinding and milling of clay and raw materials to produce the tile composite; tile rolling, pressing and cutting; kilns and spray dryers; and preparation and application of glaze and other tile decorating.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: transportation of inputs used in the activity to storage at the same location as the activity; transportation of the outputs of the activity from storage at the same location as the



conducted; mining and extraction of input materials such as clay, feldspar and quartz; and

128

production of glaze.


This clause provides that the production of ceramic floor and wall tiles is classified as a moderately emissions-intensive activity.


Clause 739 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of ceramic floor and wall tiles is 0.221 MWh per tonne of saleable ceramic floor and wall tiles.

To be eligible for exemption, the ceramic floor and wall tiles must have been produced by carrying on the activity (as defined by clause 345) to be eligible as a relevant product. For example, if imported ceramic floor and wall tiles are mixed with product produced from the activity, only the domestically produced ceramic floor and wall tiles would be included in the tonnes of the relevant product.

The tiles must be produced by undertaking the activity as described in clause 737, including that they conform to ISO 13006:2012 as in force at the time the tiles are produced (as described in clause 737), and must be of saleable quality (as defined in Regulation 22C of the Principal Regulations). In particular, the tonnes of ceramic floor and wall tiles which are scrapped, lost or discarded are not to be included in the tonnes of relevant product.

129

6.47 Nickel production

Part 48 Production of nickelDivision 1 Production of nickelClause 740 Production of nickel

Subregulation 740 (1) prescribes that the production of nickel is the chemical and physical transformation of either or both of: nickel bearing inputs into intermediate nickel products, primary nickel products or cobalt products; and intermediate nickel products into primary nickel products or cobalt products.

Each producer conducting the activity during the baseline period for assessing the eligibility of the activity used a different method to process mineralised nickel ores and low grade nickel waste products into primary nickel products. It is intended that all of the alternative processes used during the baseline period will fit within the activity description. In addition to the differing production methods used, not all producers conducted the entire activity. Some producers processed nickel ores and low grade nickel waste products to saleable intermediate products, some producers processed intermediate products to final nickel and cobalt products and some producers conducted the full process.

The inputs of this activity are nickel bearing inputs and intermediate nickel products. The outputs of this activity are intermediate nickel products, primary nickel products and cobalt products.

The activity does not include the upstream mining of mineralised nickel ores or the production of low grade nickel waste input products. Further, the activity does not include the downstream processing of the relevant products or the processing of any by-products from the production of integrated nickel or cobalt products, other than as specified in the activity.

Subregulation 740 (2) set out the meaning of “cobalt products”, “intermediate nickel products”,“nickel bearing inputs” and “primary nickel products”.

Cobalt products are defined to mean cobalt hydroxide where the concentration of cobalt is equal to or greater than 65 per cent with respect to mass; and cobalt where the concentration of cobalt is equal to or greater than 99 per cent cobalt with respect to mass.

6 Subclause 740(2) of Schedule 6 (paragraph (a) of definition of cobalt products)This item includes cobalt oxyhydroxide (CoOOH) in the definition of cobalt productsconsidered to be eligible production for the purpose of the issue of ExemptionCertificates.

Intermediate nickel products are defined to mean: nickel matte where the concentration of nickel is equal to or greater than 64 per cent nickel

with respect to mass; mixed nickel-cobalt hydroxide precipitate where the concentration of nickel is between 42

and 47 per cent (inclusive) with respect to mass; basic nickel carbonate where the concentration of nickel is between 40 and 45 per cent

(inclusive) with respect to mass; and nickel sulphide concentrate where the concentration of nickel is between 11 and 29 per

cent (inclusive) with respect to mass.

7 Subclause 740(2) of Schedule 6 (paragraph (b) of definition of intermediate nickelproducts)This item changes the minimum concentration of nickel in the intermediate nickel productsdefinition of mixed nickel-cobalt hydroxide precipitate from 42 per cent to 35 per cent.

130

Nickel bearing inputs are defined to mean mineralised nickel ores (including laterite or sulphide) and low grade nickel waste products that require equivalent processing to mineralised nickel ores.Primary nickel products are defined to mean: basic nickel carbonate where the concentration of nickel is equal to or greater than 50 per

cent nickel with respect to mass; nickel oxide where the concentration of nickel is equal to or greater than 78 per cent nickel

with respect to mass; and nickel where the concentration of nickel is equal to or greater than 98 per cent nickel with

respect to mass.



within the activity or is necessary for the activity to proceed as described; and o onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations; crushing and grinding of raw materials that is contiguous with the nickel production

process; the production of oxygen where this is consumed in the activity boundary; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: transportation of inputs used in the activity to storage at the same location as the activity; transportation of the outputs of the activity from storage at the same location as the



conducted; mining of nickel ores; crushing and grinding of raw materials that is not contiguous with the nickel production

process; production of ammonia; and production of calcrete.

It is intended that low grade nickel waste products which require equivalent processing to mineralised nickel ores to produce primary nickel products should be considered mineralised nickel ores for the purposes of this activity definition.1. Where a nickel intermediate product is the output of a leaching, smelting or similar process

used to process nickel ore into a product suitable for further refining, such as: a. Nickel matte where the concentration of nickel is equal to or greater than 64 per cent

nickel with respect to mass.b. Mixed nickel-cobalt hydroxide precipitate (MHP) where the concentration of nickel is

between 42 and 47 per cent (inclusive) with respect to mass.

131

c. Basic nickel carbonate (Ni3(CO3)(OH)4, basic nickel (II) carbonate, BNC) where the concentration of nickel is between 40 and 45 per cent (inclusive) with respect to mass.

d. Nickel sulphide concentrate (NiS) where the concentration of nickel is between 11 and 29 per cent (inclusive) with respect to mass.All concentrations should be measured on a dry weight basis.

2. Where a primary nickel or cobalt product is defined as either: a. Basic nickel carbonate (Ni3(CO3)(OH)4, basic nickel (II) carbonate, BNC) where the

concentration of nickel is equal to or greater than 50 per cent nickel with respect to mass.

b. Nickel oxide (NiO) where the concentration of nickel is equal to or greater than 78 per cent nickel with respect to mass.

c. Nickel (Ni) where the concentration of nickel is equal to or greater than 98 per cent nickel with respect to mass.

d. Cobalt hydroxide (Co(OH)2) where the concentration of cobalt is equal to or greater than 65 per cent with respect to mass.

e. Cobalt (Co) where the concentration of cobalt is equal to or greater than 99 per cent cobalt with respect to mass.All concentrations should be measured on a dry weight basis.

Note that primary nickel products produced from bought-in nickel intermediate products or other inputs are not eligible to apply for this baseline.

Note that a tonne of nickel cannot be allocated under this baseline as well as the first baseline. Where a particular batch of primary nickel products is produced from both intermediate nickel produced by the applicant as part of the activity and bought-in intermediate nickel product, the outputs need to be appropriately apportioned between this and the first baseline.

Division 2 Classification of activityRegulation 741 – Classification of activity

The clause provides that the production of nickel is classified as a moderately emissions-intensive activity.

Division 3 Electricity baseline for calculating exemptionRegulation 742 – Electricity baseline for product

Regulation 742 prescribes that the electricity baselines for calculating the amount of a liable entity’s exemption for the production of nickel are: 9.29 MWh per tonne of 100 per cent equivalent nickel contained within primary nickel

products produced from mineralised nickel ore or low grade nickel waste products; 6.45 MWh per tonne of 100 per cent equivalent nickel contained within nickel intermediate

products produced from mineralised nickel ore or low grade nickel waste products that are not subsequently transformed into primary nickel products at the same facility;

2.84 MWh per tonne of 100 per cent equivalent nickel contained within primary nickel products produced from nickel intermediate products not produced that have not been produced at the same facility; and/or

8.89 MWh per tonne of 100 per cent equivalent cobalt contained within cobalt products.

It is intended that all concentrations will be measured on a dry weight basis.

Subregulation 742 (2) prescribes that the nickel mentioned in subregulation 742 (1) must have been produced by carrying on the activity (as defined by regulation 740) to be eligible as a relevant product. The nickel must be of saleable quality (as defined in regulation 22C of the Principal Regulations).

132

6.48 Helium production

Part 49 Production of heliumDivision 1 Production of heliumClause 743 – Production of helium

Clause 743 provides that the production of helium is the physical and chemical transformation of a gas mixture that has a concentration of helium (He) less than or equal to 10 per cent with respect to moles (inclusive) to helium where the concentration of helium (He) is greater than or equal to 99 per cent with respect to moles.

The activity as conducted during the period used to assess the eligibility of the activity involved the onsite separation and liquefaction of gas mixtures to produce helium.

The inputs of the activity have been defined to include a gas mixture that has a concentration of helium less than or equal to 10 per cent. The output of this activity is saleable helium that has a concentration of helium greater than or equal to 99 per cent with respect to moles.

The activity does not include the upstream mining and extraction of gas inputs. The activity also does not include the production of liquefied natural gas.

InclusionsFor the purposes of the emissions and electricity use which are to be included within the activity boundary: the direct emissions from, and electricity use of, machinery, equipment and processes


within the activity or is necessary for the activity to proceed as described; and o onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations; production of nitrogen consumed within the activity; liquefaction prior to saleable helium (He) storage; onsite transportation to storage and storage of saleable helium (He); waste heat recovery within the activity boundary; and steam consumed within the activity boundary.

ExclusionsFor the purposes of the emissions and electricity use which are to be excluded from the activity boundary: – transportation of input used in the activity to storage at the same location as the activity; transportation of the outputs of the activity from storage at the same location as the


operations, either at the same location as the activity or elsewhere; and emissions associated with the generation of electricity on the site where the activity is

conducted


This clause provides that the production of helium is classified as a moderately emissions-intensive activity.

133


Clause 745 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of helium is 36.5 MWh per tonne of saleable helium.

To be eligible for exemption, the helium output must have been produced by carrying on the activity (as defined by clause 743) to be eligible as a relevant product. For example, if imported helium is mixed with output produced from the activity, only the proportion of helium that is an output from the activity would be included in the tonnes of the relevant product.

The helium must be of saleable quality (as defined in Regulation 22C of the PrincipalRegulations). In particular, the tonnes of helium which are lost or discarded are not to beincluded in the tonnes of relevant product.

134

6.49 Dried distillers grains with solubles production

Part 50 Production of dried distillers grains with solubles Division 1 Production of dried distillers grains with solublesClause 746 – Production of dried distillers grains with solubles

Clause 746 provides that the production of dried distillers grains with solubles is the physical and/or chemical transformation of condensed distillers solubles, with a moisture content equal to or greater than 55 per cent, and/or wet distillers grains, with a moisture content equal to or greater than 60 per cent, into saleable dried distillers grains with solubles, with a moisture content of equal to or less than 12 per cent and a protein content of equal to or greater than 20 per cent on a dry solids basis.

The activity as conducted during the period used to assess the eligibility of the activity involved the onsite decantation, mixing, drying and cooling of condensed distillers solubles and mill feed to produce dried distillers grains with solubles.

The inputs of the activity have been defined to include condensed distillers solubles, with a moisture content equal to or greater than 55 per cent, and/or wet distillers grains, with a moisture content equal to or greater than 60 per cent. The output of this activity is saleable dried distillers grains with solubles, with a moisture content of equal to or less than 12 per cent and a protein content of equal to or greater than 20 per cent on a dry solids basis.

The activity does not include the upstream production of condensed distillers solubles and wetdistillers grains. The activity also does not include the production of high purity ethanol.



within the activity or is necessary for the activity to proceed as described; ando onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations; waste heat recovery within the activity boundary; and steam consumed within the activity boundary.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: the production of high purity ethanol; the upstream processing of ethanol by-products into condensed distillers solubles; the evaporation of thin stillage; transportation of inputs used in the activity to storage at the same location as the activity; transportation of the outputs of the activity from storage at the same location as the


operations, either at the same location as the activity or elsewhere; and emissions associated with the generation of electricity on the site where the activity is

conducted.

135


This clause provides that the production of dried distillers grains with solubles is classified as a highly emissions-intensive activity.


Clause 748 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of dried distillers grains with solubles is 0.0785 MWh per tonne of saleable dried distillers grains with solubles.

To be eligible for exemption, the dried distillers grains with solubles output must have been produced by carrying on the activity (as defined by clause 746) to be eligible as a relevant product. For example, if imported dried distillers grains with solubles is mixed with output produced from the activity, only the proportion of dried distillers grains with solubles that is an output from the activity would be included in the tonnes of the relevant product.

The dried distillers grains with solubles must be of saleable quality (as defined in Regulation 22C of the Principal Regulations). In particular, the tonnes of dried distillers grains with solubles which are lost or discarded are not to be included in the tonnes of relevant product.

136

6.50 Glass wool production

Part 51 – Production of glass woolDivision 1 – Production of glass woolClause 749 – Production of glass wool

Clause 749 provides that the production of glass wool is the chemical and physical transformation of either or both of the following:a) recycled materials (such as cullet); and/orb) silicon dioxide (SiO2, silica); and both of the following:c) sodium carbonate (Na2CO3, soda ash); andd) other raw materials through a melting, fiberising, binding and curing process into saleable glass wool. Glass wool is generally used in domestic and commercial building insulation products.

The activity as conducted during the period used to assess the eligibility of the activity involved the physical and chemical transformation of recycled materials (such as cullet) and/or silicon dioxide (SiO2, silica), sodium carbonate (Na2CO3, soda ash) and other raw materials through a melting, fiberising, binding and curing process into saleable glass wool.

The inputs of the activity have been defined to include recycled materials (such as cullet), silicon dioxide (silica), sodium carbonate (soda ash) and other raw materials. The output of this activity is tonnes of saleable glass wool.

The activity does not include the extraction or production of any of the raw materials, such as silica or soda ash, or the collection of recycled materials from a location that is not the same as the activity. The activity also does not include any downstream processes such as unitisation, compressing, facing and packaging.



within the activity or is necessary for the activity to proceed as described;o onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligations; waste heat recovery within the activity boundary; steam consumed within the activity boundary; use of furnaces; use of curing ovens; and use of cutters and choppers to cut glass wool into blankets, batts or boards.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: transportation of input/s used in the activity to storage at the same location as the activity; transportation of the output of the activity from storage at the same location as the activity; extraction, production and crushing of silicon dioxide (SiO2, silica); production of sodium carbonate (Na2CO3, soda ash) and other raw materials; unitisation, compressing, foiling and other downstream processing of glass wool;

137

collection of external recycled cullet from a location that is not the same as the activity and the subsequent processing and transport of the cullet not at the same location as the activity;

complementary activities, such as packaging, head office, administrative and marketing operations, either at the same location as the activity or elsewhere; and

emissions associated with the generation of electricity on the site where the activity is conducted.


This clause provides that the production of glass wool is classified as a moderately emissions-intensive activity.


Clause 751 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of glass wool is 1.78 MWh per tonne of saleable glass wool.

To be eligible for exemption, the glass wool output must have been produced by carrying on the activity (as defined by clause 749) to be eligible as a relevant product. For example, if imported glass wool is mixed with output produced from the activity, only the proportion of glass wool that is an output from the activity would be included in the tonnes of the relevant product.

The glass wool must be of saleable quality (as defined in Regulation 22C of the PrincipalRegulations). In particular, the tonnes of glass wool which are lost or discarded are not to be included in the tonnes of relevant product.

138

6.51 Coal char production

Part 52 – Production of coal charDivision 1 – Production of coal charClause 752 – Production of coal char

Clause 752 provides that the production of coal char is the chemical and physical transformation of coal or a coal-based input at a temperature higher than 700oC into coal char that, on a dry weight basis:a) has a volatile matter of less than 2 per cent after production; andb) exhibits a silicon oxide (SiO) reactivity R10 corrected value of less than 1,100 ml of SiO gas at standard temperature and pressure.

Coal char is used in ferroalloy production, steel manufacturing, activated carbon production, barbeque briquette production and as a filter medium in industries.

The activity as conducted during the period used to assess the eligibility of the activity involved the chemical and physical transformation of coal or a coal-based input at a temperature higher than 700oC into saleable that has a volatile matter of less than 2 per cent after production; and exhibits a SiO reactivity R10 corrected value of less than 1,100 ml of SiO gas at standard temperature and pressure.

The inputs of the activity have been defined to include coal or a coal based inputs. The output of this activity is dry tonnes of saleable coal char which meets the volatile matter and silicon oxide reactivity specifications. The activity does not include the production of brown coal briquettes. The activity also does not include any downstream processes that involve the transformation of coal char into products suitable for barbeque fuel applications.



o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity; ando the processing of by-products where they involve the recovery of materials for

re-use within the activity or are necessary for the activity to proceed as described.

onsite processing of waste materials from the activity to comply with Commonwealth, State or Territory obligations; and

the direct emissions associated with the brown coal briquette screening processes, the operation of retorts, washer equipment, effluent incineration and drier gas incineration.





the generation of electricity on the site where the activity is conducted; the production of brown coal briquettes; and

139

emissions associated with downstream processes to coal char production that involve the transformation of coal char into products suitable for BBQ fuel applications.


This clause provides that the production of coal char is classified as a highly emissions-intensive activity.


754a) provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the production of coal char is 0.120 MWh per tonne of saleable coal char on a dry weight basis that meets the volatile matter and silicon oxide reactivity specifications as prescribed.

754 b) the coal char has a fixed carbon content of greater than or equal to 92 per cent after production.

To be eligible for exemption, the coal char output must have been produced by carrying on the activity (as defined by clause 752) to be eligible as a relevant product. For example, if imported coal char is mixed with output produced from the activity, only the proportion of coal char that is an output from the activity would be included in the tonnes of the relevant product.

The coal char must be of saleable quality (as defined in Regulation 22C of the PrincipalRegulations). In particular, the tonnes of coal char which are lost or discarded are not to be included in the tonnes of relevant product.

140

6.52 Ferrovanadium production

Part 53 – Production of ferrovanadiumDivision 1 – Production of ferrovanadiumClause 755 – Production of ferrovanadium

Clause 755 provides that the production of ferrovanadium is the physical and chemical transformation of magnetite ore (ore containing Fe3O4 and mineralised vanadium compounds) combined with soda ash and other chemicals to produce saleable ferrovanadium (FeV) where the concentration of vanadium (V) is equal to or greater than 75 per cent.

Vanadium is a metal that is primarily used as a hardening agent in steel production.The inputs of the activity have been defined to include magnetite ore, soda ash and other chemicals. The output of this activity is tonnes of saleable ferrovanadium concentrate where the concentration of vanadium is greater than 75 per cent.

The activity does not include the extraction or production of any of the raw materials, such as magnetite ore or soda ash. The activity also does not include any downstream processes such as steel production, or ancillary activities such as packaging.

Inclusions: For the purposes of the formal data assessment, emissions and electricity use which are to be included within the activity boundary are: the direct emissions from, and electricity use of, machinery, equipment and processes


o machinery used to move materials within and as part of the activity;o control rooms, laboratories, maintenance workshops;o machinery used to create non-electrical energy for use in the activity; o the processing of by-products where it involves the recovery of materials for re-



the use of soda ash in production process; the compression of air where this is consumed within the activity boundary; the processing of residues and/or intermediate products in the activity; waste heat recovery within the activity boundary; steam consumed within the activity boundary; the onsite processing and treatment of water and wastewater; crushing, grinding and preparation of raw materials contiguous with the equipment

required for the ferrovanadium production process; and casting of molten alloy into saleable ferrovanadium.



conducted; mining, extraction and the delivery of vanadium ore to storage at the same location as the

activity; and crushing and grinding that is not contiguous with the ferrovanadium production process.

141


This clause provides that the production of ferrovanadium is classified as a highly emissions-intensive activity.


Clause 757 provides that the electricity baseline for calculating the amount of a liable entity’sexemption for the production of ferrovanadium is 58.7 MWh per tonne of 100 per cent equivalent vanadium concentrate contained within saleable ferrovanadium in which the concentration of vanadium is equal to or greater than 75 per cent.

To be eligible for exemption, the ferrovanadium must have been produced by carrying on the activity (as defined by clause 755) in Australia to be eligible as a relevant product. For example, if imported ferrovanadium is mixed with output produced from the activity, only the proportion of ferrovanadium that is an output from the activity would be included in the tonnes of the relevant product.

Any ferrovanadium that is produced from magnetite concentrate that was eligible for exemption under the production of magnetite concentrate activity is not eligible as relevant product under the production of ferrovanadium activity.

The ferrovanadium must be of saleable quality (as defined in regulation 22C of the RETRegulations). In particular, the tonnes of ferrovanadium which are for testing purposes and are discarded rather than saleable are not to be included in the tonnes of 100 per cent equivalent vanadium contained within saleable ferrovanadium.

142

6.53 Animal by-products rendering

Part 54 – Rendering of animal by-productsDivision 1 – Rendering of animal by-productsClause 758 – Rendering of animal by-products

Clause 758 provides that the rendering of animal by-products is the physical and/or chemical transformation of raw livestock-derived animal material, where the output of the activity is processed animal protein (such as meat and bone meal, dried blood meal, poultry meal and feather meal) with a moisture content that does not exceed 10 per cent by weight, and tallow (refined fat) with a moisture content that does not exceed 4 per cent by weight.

The inputs of the activity have been defined to include raw livestock-derived animal material.The outputs of this activity are: tonnes of saleable animal protein meal with a moisture content that does not exceed 10

per cent by weight; and tonnes of saleable tallow with a moisture content which does not exceed 4 per cent by

weight.

The activity does not include any meat processing activities. The activity also does not include any downstream processes such as packaging.



within the activity or is necessary for the activity to proceed as described;o onsite processing of by-products and waste materials from the activity to comply with

Commonwealth, State or Territory obligationso the processing of water and wastewater used in the activity; ando the control of odour generated by the activity;

waste heat recovery within the activity boundary; steam consumed within the activity boundary; and paunch cutting and washing, hogging, hashing, pre-braking, hydrolysing and/or skinning of

casualty stock to prepare the animal material processing.

ExclusionsFor the purposes of the formal data assessment, emissions and electricity use which are to be excluded from the activity boundary are: transportation of input/s used in the activity to storage at the same location as the activity; transportation of the output of the activity from storage at the same location as the activity; transportation of intermediate products between different sites conducting the activity; activities related to meat processing at the same location; complementary activities, such as packaging, head office, administrative and marketing


conducted; and the generation of steam for use outside the activity.

Division 2 Classification of activity

143

Clause 759 – Classification of activity

This clause provides that rendering of animal by-products is classified as a moderately emissions-intensive activity.


Clause 760 provides that the electricity baseline for calculating the amount of a liable entity’s exemption for the rendering of animal by-products is 0.248 MWh per tonne of saleable processed animal protein meal with a moisture content that does not exceed10 per cent by weight which results from carrying out the activity as described.

To be eligible for exemption, the animal protein must have been produced by carrying on the activity (as defined by clause 758) in Australia to be eligible as a relevant product. For example, if imported animal protein is mixed with output produced from the activity, only the proportion of animal protein that is an output from the activity undertaken in Australia would be included in the tonnes of the relevant product.

The animal protein must be of saleable quality (as defined in regulation 22C of the RETRegulations). In particular, the tonnes of animal protein which are for testing purposes or scrap and are discarded rather than saleable are not to be included in the tonnes of animal protein meal for the purpose of exemption.

144

web viewemissions-intensive trade-exposed activity boundaries . contents. 1. the emissions-intensive...

Documents