Methanol

Summary of submissions

  • Methanex submits that the transportation of finished product to the point of export should be added as an inclusion, because methanol is predominantly exported and transportation is an integral part of the activity.
  • Methanex asserts that the transportation of inputs, outputs and intermediate products within the activity boundary should be included as these processes are integral to manufacturing.
  • Methanex submits that the exclusion of electricity consumption from complementary activities should be removed as it is immaterial and difficult to calculate.

Summary of analysis

The issues raised by Methanex are addressed by the data rules and exclusions that apply consistently across all activities.

Matter Analysis
The requirement to define each activity by reference to a physical, chemical or biological transformation of inputs into outputs. The activity should be defined by the chemical transformation of inputs into methanol as an output. 
The undesirability of activities being defined by reference to the technology employed, the fuel used, the age of the plant, or the quality of the types of feedstock used when the activity is carried out. The proposed activity definition does not reference technology, fuel used, age of plant, or types of feedstock.
The desirability of defining activities:
  • consistently and equitably across industries.
  • in a way that takes into account the impact that definitions may have on business investment, geographical location, and the structure of activities.
  • in a way that takes into account the potential for intermediate inputs produced when the activity is carried out to be substituted for bought-in inputs.
 The proposed activity definition is consistent with this matter.
The exclusion of downstream transportation has been applied consistently across activities, reflecting the focus of assistance on the transformation of inputs into trade-exposed outputs and the potential inequity created by differing transport arrangements.
The proposed activity definition provides for transportation within the activity as an inclusion as this does not affect incentives associated with geographical location.  However, this will still be subject to methodologies relating to emission sources (i.e. whether emissions from liquid fossil fuels can be included in the calculation of emissions).
The exclusion of electricity consumed from complementary activities is consistent with this matter, because emissions from complementary activities may differ depending on how a business is structured.  Materiality issues should be addressed through data collection methodologies.   
The desirability of there being no overlap between activity definitions. The proposed activity definition does not overlap with other activities.
Any other matters the Minister considers relevant, including activity definitions proposed to be used in Australia. The proposed activity definition reflects the activity definition for production of methanol in Australia.

Recommendation

We recommend that the proposed activity definition for methanol should remain substantively unchanged.

Last updated: 10 May 2010