Australia delays carbon trading scheme

07 May 2009

The Australian government has delayed the start of its proposed emissions trading scheme by a year and introduced the possibility of tougher reduction targets, in a bid to ease pressure on companies during the global financial crisis.

Originally due to take effect from July 2010, the changes mean the Carbon Pollution Reduction Scheme will now be introduced from July 2011, with a one-year fixed-price phase for carbon pollution permits.

The package also includes a commitment to reduce carbon emissions by 25 per cent on 2000 levels by 2020 if the world agrees to a deal to stabilise levels of CO2 equivalent in the atmosphere at 450 parts per million or less by 2050. 

UN climate change talks are being held in Copenhagen in December. If this ambitious target is not agreed, the government will revert to its previously announced targets of a 5 per cent reduction, rising to 15 per cent if there is global agreement for a substantial cut in emissions.

Environmental groups support the new package. The Australian Southern Cross Climate Coalition of environment, union, welfare and research groups says it acknowledges the softer start to the trading scheme but believes the stronger 2020 target gives Australia the best chance of helping to achieve a good international climate agreement.

The one-year fixed price phase of the amended plan sees carbon pollution permits costing A$10 (5) per tonne of carbon in 2011-2012, with transition to full market trading on 1 July 2012. In addition, a Global Recession Buffer will give extra permits to trade-exposed, emissions-intensive industries for free.

The Business Council of Australia supports the revised scheme. It has urged the Senate to pass the legislation this year to give businesses certainty on timing and details. The government is also keen to get the legislation passed this year.

However, the Labour Party does not have a majority in the Australian Senate and will need cross party support to get the legislation through. The Liberals have described the revised scheme as a 'humiliating backdown' and would like to see the Senate delay considering the scheme until it has been reviewed by the Productivity Commission in light of what happens in Copenhagen.

The Australian Greens have also criticised the revised scheme.   They would support a 25 per cent minimum unconditional target. 

Karen Harries-Rees


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