The Australian government has bowed in to pressure from those opposed to its carbon trading plans by delaying the start of the scheme by one year.
Prime minister Kevin Rudd said that the delay will help Australian companies to manage the impacts of the global recession and also announced a number of other changes to the Carbon Pollution Reduction Scheme (CPRS).
The CPRS will now start in July 2011 with an initial one-year fixed-price phase during which an unlimited number of permits will be issued to liable companies. Rudd also announced new targets for carbon emissions in Australia.
Other concessions made to big businesses opposed to the carbon trading scheme include a ‘Global Recession Buffer’ for emissions-intensive industries and funding for energy efficiency investments.
The move is a blow to the Rudd government, which put the CPRS at the heart of its policies and which recently agreed to play host to the newly-created Global Carbon Capture and Storage Institute (GCCSI). Emissions trading was to have begun in 2010, covering around 75 per cent of Australia’s emissions and six greenhouse gases.
The move to delay the scheme has been criticised by green groups, but other feel that the outlook for carbon trading in Australia is now more clear following months of debate and criticism of the scheme.
The one-year fixed-price phase will apply between 1 July 2011 and 30 June 2012, with each carbon permit costing A$10. From 1 July 2012, businesses covered by the scheme will have to purchase permits at the prevailing market price.
The fixed-price permits available in the first year will not be bankable for use in later years.
Emissions intensive trade exposed (EITE) industries will be able to take advantage of the Global Recession Buffer scheme, which will see the biggest polluters receive almost 95 per cent of their permits for free.
Alongside the changes to the CPRS, Rudd also announced plans to increase Australia’s target for emission cuts to 25 per cent over 2000 levels by 2020 if a new global greenhouse gas agreement is reached at December’s UN conference in Copenhagen.
The new target could be reached by harnessing the CPRS, renewable energy targets and investment in energy efficiency and carbon capture and storage (CCS) technologies.
It represents a proposed increase on the country’s current target of reducing carbon emissions by 5-15 per cent over 2000 levels by 2020, and is conditional upon nations agreeing to stabilise levels of CO2 equivalent at 450 ppm or lower by mid-century at the Copenhagen meeting.
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