July saw the release of the Federal Government’s Green Paper on an Australian Emissions Trading Scheme, now called The Carbon Pollution Reduction Scheme. Outlining the Government’s approach to the design of the scheme, Penny Wong, the Federal Minister for Climate Change and Water said when releasing the paper, “in this Green Paper, the Government has sought to strike the right balance, on the basis of economically responsible policy in the national interest.” The Green Paper is open to submissions from interested stakeholders until September 10 this year.

The Government’s approach to emissions trading takes into account the work completed by the former Howard Government’s Task Group on emissions Trading (TGET), the National Emissions Trading Task Force (NETT) and the recommendations of Professor Ross Garnaut’s Climate Change Review. Following this the Government intends to release their final decisions in a white paper and draft legislation in December. Based on a number of factors including detailed modelling by the Treasury the white paper will also include the Government’s medium-term emissions trajectories.

Below is a summary of how the Government’s proposed scheme will work:

With 1000 Australian businesses directly affected by the introduction of the scheme, the Government has proposed to cover the following areas: stationary energy, transport, fugitive emissions, industrial processes, waste and forestry sectors and the six greenhouse gases included under the Kyoto Protocol. The Carbon Pollution Reduction Scheme will indirectly affect all other Australian businesses through price rises in electricity, gas and other resources. Following its introduction the scheme will be regulated by an independent body whose primary role will be to, “monitor and enforce compliance, run auctions for permits, allocate free permits according to clearly specified rules, and maintain the national emissions registry.”

The Green Paper can be accessed at: http://www.greenhouse.gov.au/greenpaper/index.html.

Submissions

Submissions can be sent to:

A cover sheet for submissions is available at www.climatechange.gov.au or can be requested from the Department of Climate Change on 1800 057 590.

Other relevant proposals from the Green Paper

Price caps
There will be a cap on the price that businesses would be required to pay for permits for the first five years of the scheme.
Emissions caps
The level of schemes caps (emission limits) applied through the scheme are not addressed in the Green Paper, however, “no limits or caps are imposed on individual emitters or sectors, so long as they acquire sufficient permits to surrender in respect of those emissions.”
Transport
Although petrol is included in the scheme fuel taxes to be cut on a cent by cent basis to offset any price increase associated with the introduction of the scheme.
Agriculture
The earliest that agriculture to enter the Carbon Pollution Reduction Scheme would be 2015.
Forestry
Government proposes to include forestry in a voluntary basis from scheme start, suggesting this approach because, "unlike other sectors of the economy, forests are likely to store more carbon than they emit."
NGERS
A single annual report prepared by liable entities will be sufficient in meeting the requirements under NGERS and the Carbon Pollution Reduction scheme.

Compensations

Emissions Intensive Trade-exposed companies (EITE)
Government prefers 30 percent allocation of carbon pollution permits to EITE companies:

• An emissions intensity above 2,000 t CO₂‑e/$ million revenue would have the initial assistance level set at around 90 percent of industry average emissions per unit of output
• Emissions intensities between about 1,500 and 2,000t CO₂‑e/$ million revenue would have the initial assistance level set at around 60 percent

Households
The Government commits to:

• Increase payments, above automatic indexation, to people in receipt of pensioner, carer, senior and allowance benefits and to provide other assistance to meet the overall increase in the cost of living flowing from the scheme
• Increase assistance to other low-income households through the tax and payment system to meet the overall increase in the cost of living flowing from the scheme
• Provide assistance to middle-income households to help them meet any overall increase in the cost of living flowing from the scheme
• Review annually in the Budget context the adequacy of payments to beneficiaries and recipients of family assistance to assist households with the overall impacts of the scheme, noting that these payments are automatically indexed to reflect changes in the cost of living
• Provide additional support through the introduction of energy efficiency measures and consumer information to help households take practical action to reduce energy use and save on energy bills so that all can make a contribution

References

• 'Australian Government, Carbon Pollution Reduction Scheme,' Summary, 2008
• Media Release, Senator the Hon Penny Wong, Minister for Climate Change and Water, 'Green Paper on Carbon Pollution Reduction scheme Released,' July 16, 2008