•       This Act sets up a mechanism to deal with climate change by encouraging the use of clean energy.

•       The mechanism begins on 1 July 2012, and operates on a financial year basis.

•       The mechanism is administered by the Clean Energy Regulator.

•       If a person is responsible for covered emissions of greenhouse gas from the operation of a facility, the facility's annual emissions are above a threshold, and the person does not surrender one eligible emissions unit for each tonne of carbon dioxide equivalence of the gas, the person is liable to pay unit shortfall charge.

•       If a natural gas supplier supplies natural gas, and does not surrender one eligible emissions unit for each tonne of carbon dioxide equivalence of the potential greenhouse gas emissions embodied in the natural gas, the supplier is liable to pay unit shortfall charge.

•       If a person opts in to the mechanism, the person acquires, manufactures or imports taxable fuel in specified circumstances, and does not surrender one eligible emissions unit for each tonne of carbon dioxide equivalence of the potential greenhouse gas emissions embodied in the fuel, the person is liable to pay unit shortfall charge.

•       The financial years beginning on 1 July 2012, 1 July 2013 and 1 July 2014 are fixed charge years .

•       Later financial years are flexible charge years .

•       In a fixed charge year, carbon units will be issued under this Act for a fixed charge.

•       In a flexible charge year, carbon units will be issued under this Act as the result of an auction.

•       However, in the flexible charge years beginning on 1 July 2015, 1 July 2016 and 1 July 2017, some carbon units may be issued for a fixed charge (to act as a cap).

•       Free carbon units will be issued under the Jobs and Competitiveness Program (which deals with emissions-intensive trade-exposed activities).

•       Free carbon units will be issued to coal-fired electricity generators.

•       A carbon pollution cap limits the sum of:

               (a)     the total number of auctioned carbon units; and

              (b)     the total number of free carbon units issued in accordance with the Jobs and Competitiveness Program; and

               (c)     the total number of free carbon units issued to coal-fired electricity generators.

•       If a carbon unit was not issued for a fixed charge, the unit is transferable.

•       The Climate Change Authority will conduct periodic reviews of this Act.