Govt to delay start of carbon trading

The federal government will delay the start of its carbon pollution reduction scheme
by a year and could seek deeper cuts to emissions than originally planned.
Prime Minister Kevin Rudd cited the recession, a need to give certainty to business
and a chance to negotiate a global agreement in December as the reasons for the
decision.
The carbon production reduction scheme (CPRS) will now start on July 1, 2011, while
businesses eligible for assistance will receive a "recession buffer" of more free
carbon pollution permits.
The cost of carbon will be slashed from $40 a tonne to $10 a tonne in the first year
of the scheme.
The announcement, a week before the federal budget, has been overwhelmingly endorsed
by key business groups, unions and most green and conservation groups.
It gives the government a welcome circuit breaker in the face of almost universal
opposition to the original scheme unveiled in March.
Climate Change Minister Senator Penny Wong will begin talks with the opposition and
cross-bench senators soon in a bid to get the necessary legislation through
parliament by the end of June.
Mr Rudd also threw down the gauntlet to Opposition Leader Malcolm Turnbull, calling
on him to support the new proposals.
"It's time to get off the fence Mr Turnbull and it's time to act in the national
interest and to secure this legislation and certainty for our future," Mr Rudd told
reporters in Canberra.
But Mr Turnbull described the new plan as a "massive backdown" and said the
government should refer the proposals to the Productivity Commission for an inquiry.
"Mr Rudd and Senator Wong have tinkered with a deeply flawed proposal that still
looks likely to damage the economy, yet has not so far been demonstrated to be the
most cost-efficient or effective way to reduce carbon emissions," Mr Turnbull told
reporters in Sydney.
He said the opposition would not be supporting the scheme in its current form.
The government also said it was willing to commit to cutting carbon emissions by 25
per cent of 2000 levels by 2020 - up from a maximum of 15 per cent - but only if a
global deal was reached in Copenhagen.
Mr Rudd and Senator Wong cautioned the 25 per cent target was "highly conditional"
on the UN summit agreeing to stabilise carbon dioxide levels to the equivalent in
the atmosphere to 450 parts per million or less by 2050.
If the ambitious global agreement was reached, Mr Rudd said the government "would
seek a new election mandate for increased 2050 targets".
"What you have effectively is a slower start to the carbon pollution reduction
scheme and the prospect of a stronger, greener conclusion."
The government also announced it will set up the Australian Carbon Trust to provide
$50 million in "seed" funding to promote energy efficiency in the business sector.
The trust will also have a $25.8 million "pledge fund" to allow householders to buy
and retire carbon pollution permits and claim the expense as a tax deduction.
But Australian Greens deputy leader Senator Christine Milne said the increased free
permits for industry would give "old" polluters an extra $2.2 billion in government
support.
"If you add a little green to brown, you still get brown," Senator Milne said in a
statement.
She said the scheme had been weakened and would effectively mean no climate action
in Australia until July 2012 at the earliest.
Independent Senator Nick Xenophon said the scheme was fundamentally flawed because
it did not go far enough, was still a lame duck and "unfixable".
"If you give a lame duck a haircut, it's still a lame duck," Senator Xenophon said.
The other cross-bench senator whose support the government will need, Family First's
Steve Fielding, said the government's intentions were confused and called on it to
wait until Copenhagen before "locking" Australia into a commitment.
The Australian Industry Group (Ai Group), which represents the interests of 60,000
businesses, said the proposals demonstrated the government's recognition of the need
to address business concerns.
Ai Group wants legislation setting up the scheme through parliament this year.
"This is critical to establish the degree of certainty business requires in
assessing medium and longer-term investment decisions," chief executive Heather
Ridout said in supporting the changes.
The Australian Chamber of Commerce and Industry (ACCI) says a delayed and soft start
to the ETS will help business.
"More certainty has been provided today in terms of the lower carbon price initially
in that first year, which will be a benefit to business in terms of lower energy
costs," ACCI's director of industry policy and economics Greg Evans said.
But the chamber still has concerns about what impact a market price for carbon will
have on business after 2012.
There will be a one-year fixed carbon price of $10 a tonne when an ETS is introduced
in mid-2011.
"We outlined from the very beginning that's an issue for business," Mr Evans said.
The chamber has commissioned modelling into the impact of higher energy costs on
Australian business, especially small and medium-sized enterprises, and those that
are trade exposed.
"We are hoping that will be finalised at the end of this month or early June to
input into the Senate deliberations and the passage of legislation."
The changes have also won support from a coalition of trade unions, green groups and
a major welfare organisation.
Southern Cross Climate Coalition CEO, John Conner says the new 25 per cent carbon
reduction target will give Australia credibility when global climate change
negotiations begin in Copenhagen later this year.
"This package today puts Australia in the position to help build an international
agreement that counts," he told reporters.
ACTU president Sharan Burrow says the changes also will help create jobs in new
green industries.
"The prime minister and the minister for climate change have put Australia in a
position where we can go to the international negotiations with our head held high,"
she said.
Clare Martin from ACOSS said it was important all political parties ensured
legislation, setting up the scheme, passed through parliament.
"We call on all parties in the Senate to support this legislation so Australia can
go forward ... to Copenhagen," she said.
Australian Conservation Foundation executive director Don Henry says the higher 2020
reduction target would help Australia put pressure on other countries to cut their
own emissions.
He described the revised 25 per cent target as significant, adding it would allow
Australia to play a credible role internationally.
However, Greenpeace says the changes still fall "dismally short" of what is required.
"(Prime Minister) Kevin Rudd may know a political deal when he sees one, but you
can't negotiate with climate change," Greenpeace's head of campaigns, Steve
Campbell, said.
The changes allowed polluting industries to offset their emissions through forest
offsets on the international market, even further undermining the effectiveness of a
scheme that was already useless, he said.
"The policy changes reek of industry lobbying," Mr Campbell said, adding they would
do nothing to alleviate the effects of climate change.
Climate science showed a cut of 50 per cent in emissions was needed for a fighting
chance of avoiding the worst effects, he said.