The federal government is currently reviewing industry submissions for the introduction of a program of incentives for the destruction of synthetic greenhouse gases (SGGs), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6) and ozone depleting substances (ODS).
The program will be formally introduced on July 1, 2013.
Prior to the program being introduced the federal government has undertaken an extensive consultation process with industry.
This included in the release of a consultation paper in November, 2012.
Following its release the government sought submissions from industry which closed on December 21, 2012. In total the government received 25 submissions.
The government is expected to make a formal announcement by early March, 2013.
Most of the gases to be covered by the program are used in refrigeration, although SF6 is used primarily in electricity transformers.
The incentives will cover SGGs and ODS not suitable for reuse, recycling or reclamation.
Destruction of these gases is important to achieve better environmental outcomes but there are a wide range of issues that need to be addressed.
Moreover, ODS are being phased out globally under the Montreal Protocol and Australia will stop imports of HCFCs by 2016.
The consultation paper canvassed a range of options from a flat rate incentive program to a GWP incentive payment option as well as the many issues related to accreditation for destruction providers and the role of carbon pricing.
Currently the destruction of waste refrigerant is provided by Refrigerant Reclaim Australia (RRA), an industry-funded not-for-profit stewardship scheme established in 1993.
The scheme is funded through charges to its members of $2 per metric kilogram of ODS or SGG refrigerant imported into Australia, either in bulk or in refrigeration and air conditioning equipment.
The RRA uses these funds to cover the costs of destruction, transport, overheads and incentive payments for participants in the recovery chain such as contractors and wholesalers.
The RRA currently destroys around 500 metric tonnes of ODS and SGGs annually at a cost of $12 million or $24 per kilogram.
However, the program proposed by government in its consultation paper will be market-based creating the conditions to enable competition.
The paper states that the new program would transition gradually from the current industry-based scheme and that an annual review would be undertaken to consider changes in costs and the level of program uptake.
Industry options proposed in the consultation paper are a flat rate incentive payment program (payment would be the same for every type of gas irrespective of GWP) or a GWP-based incentive payment (paid according to a percentage of the equivalent carbon price).
Interestingly, Australia's recovery and destruction performance compares well internationally.
Japan achieves the greatest destruction rates per capita, with Australia the second best performer in the world.
The higher abatement in Japan is achieved through domestic appliance and motor vehicle recycling policies.
Australia's success can be attributed to the work done by RRA which has been working with government throughout the consultation process.
