AUSTRALIA STILL GOING FOR EMISSIONS TRADING

FACTBOX-Australia's planned carbon trading scheme
James Grubel and Ron Popeski, October 18, 2009 (Reuters)

"Australia's opposition parties released a series of amendments to the government's planned carbon trading scheme…[to help pass it] through parliament's upper house Senate…[T]he scheme, intended to be one of the world's broadest, will return to parliament in November after being defeated a first time in August. A second defeat would hand Prime Minister Kevin Rudd a legal trigger for early elections. [Some facts:]

"…[1] The so-called Carbon Pollution Reduction Scheme (CPRS) is set to start on 1 July, 2011. Under the scheme, about 1,000 of Australia's biggest polluting companies will have to purchase carbon permits, covering 75 percent of national emissions…The government is committed to an unconditional emissions cut of 5 percent by 2020. This target could be increased to 25 percent if the world agrees to a tough new climate pact to replace the Kyoto Protocol in Copenhagen this December."

click to enlarge

"…[2] The "cap and trade" scheme [will require] polluters to buy a permit for every tonne of carbon they produce. The government has proposed a flat carbon price cap of A$10-a-tonne ($9.16) on start-up. The scheme would move to full auctioning and trading of permits from 2012.

"…[3] The CPRS will raise an estimated A$11-A$12 billion [$1=A$1.09] each year for the government. The scheme includes compensation for businesses and households upon introduction, with money raised from permits going back to help taxpayers cope with resulting increased costs for fuel and electricity. The government has promised to cut fuel excise to match increases under emissions trading, while welfare payments would be increased as well."

click to enlarge

"…[4] Some polluters exposed to overseas export competition and coal-fired electricity generators will gain exemptions, including free permits, in some cases making between 66-95 percent of their emissions free, valued at over A$9 billion out to 2012. In addition, coal-fired generators will get a "once-and-for-all" allocation of A$3.9 billion out to 2015. Farmers will be exempt from the scheme until at least 2015, but are arguing strongly for permanent exclusion.

"…[5] The government says the scheme will increase living costs by around 0.9 percent, although power bills are expected to increase by 16 percent. Gas and other household energy bills will rise by 9 percent…"