Sun, Mar 01, 2009 - Page 5 News List

Australia to unveil carbon emissions trading scheme

AGENCIES , CANBERRA

The government plans to unveil legislation next month to create an Australian carbon emissions trading scheme designed to tax climate changing pollution beginning next year, Australian Climate Change Minister Penny Wong said on Friday.

Wong said her government remained set on a start date of July next year for the scheme, in which major polluters will buy and trade permits to emit carbon gases.

Industry wants the scheme delayed until 2012 because of global economic uncertainty, while some green groups favor a set-price carbon tax on emissions rather than a trading system in which market forces determine the price.

Wong said the draft legislation will be made public on March 10.

The government will consider the views of the senators before the legislation is introduced to Parliament in June, she said.

The government does not hold a majority in the Senate so will need the support of opposition or independent senators to pass the legislation.

“There will be criticisms from both sides of politics, both sides of the community, both sides of the debate,” Wong told reporters.

“But we are determined to take a balanced, reasonable perspective and to implement a scheme that will for the first time in this nation’s history reduce our contribution to climate change from next year,” she said.

The government will influence the price of carbon pollution permits by restricting the number of permits to be released on the Australian market.

Conservationists argue that the government plans to issue too many pollution permits.

Prime Minister Kevin Rudd announced in December that his government plans to reduce Australia’s greenhouse gas emissions by as little as 5 percent by the year 2020, far less than the 25 percent cut sought be environmentalists.

Heather Ridout, chief executive of the business lobbyist Australian Industry Group, said next year’s start date was “neither necessary, nor realistic.” as the economic downturn already reduced industrial pollution.

Analysts are also concerned the low price of carbon in Europe could prompt changes

“We do believe we have learnt from Europe’s experience. Obviously, if you set a market mechanism up, it’s going to reflect economic circumstances and that is in fact one of the advantages of a trading scheme over a carbon tax,” Wong said.

Benchmark EU Allowances (EUAs) plunged to 8.05 euros (US$10.30) on Feb. 12, an all-time low for the EU trading scheme’s second phase, from nearly 31 euros last year.

Heavy selling of EUAs from industry trying to raise cash has helped push down prices. But the financial crisis has also curbed industrial output in Europe and cut carbon pollution, reducing demand for the offsets.

The Australian plan will allow the market to set the carbon price, which the government expects to be around A$23 (US$15) a tonne, with an initial cap of A$40 a tonne, rising by five percent a year above inflation to ensure price stability.

Australia’s carbon trading plan will cover 75 percent of the nation’s emissions and 1,000 of the nation’s biggest firms, including major resource companies, which are already feeling the impact of the global downturn. Australia, the world’s biggest coal exporter and a growing supplier of liquefied natural gas (LNG), accounts for 1.5 percent of global carbon emissions but is one of the highest per-capita polluters, with 80 percent of electricity from coal-fired power stations.

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