THE GOOD, THE BAD AND THE UGLY
17 July 2008
Adam Morton, Environment Reporter
Climate Plan - ENVIRONMENTAL REACTION
THE environmental lobby has given the Government's plan to cut greenhouse emissions a mixed report card: polite praise for its urgency, but damning criticism for compensating coal-fired electricity generators and doing nothing to discourage people from driving.
While all welcomed the decision to stick with a 2010 starting date, green groups attacked the emphasis on compensation for heavy-polluting industry and the decision to offset any petrol price rise with a corresponding fuel-tax cut.
All said the biggest test was yet to come: the medium-term target for 2020, to be set before the end of the year, which will determine how quickly emissions are cut.
The harshest criticism was saved for the Government's decision to defy adviser Ross Garnaut's recommendation not to offer direct help to heavy-polluting, coal-fired power stations. Under the Government's plan, they will either be paid an unspecified amount of compensation or given free pollution permits on the grounds that the country needs to encourage healthy investment in the electricity supply.
WWF Australia chief executive Greg Bourne said power stations had known for 20 years that greenhouse emissions would be regulated, and had no case for free entry to carbon trading.
"Every cent spent on providing assistance to existing power stations is money not spent on supporting clean energy research, households and trade-exposed industries," he said.
Mr Bourne also said any cut to fuel taxes to protect motorists should be a one-off.
"It is very important that price mechanisms are not interfered with further down the track because this will reduce the incentive to invest in clean transport alternatives," he said.
The Australian Conservation Foundation said paying electricity generators compensation would weaken the effectiveness of the scheme.
"The more compensation that goes to big polluters, the bigger the financial burden on the poor, the most vulnerable and rural Australians," ACF climate change program manager Tony Mohr said.
He said cutting the fuel tax would make little difference to family budgets and leave less money for public transport and improving car efficiency.
Climate Institute chief executive John Connor said the discussion paper was "a good start, but not a great start".
He said it had fallen short in its failure to offer support for developing countries and the lack of clarity over what incentives would exist to invest in clean energy technology.
Mr Connor said the fuel tax cut would "rip billions" from a fund to help businesses adapt, but was unlikely to be replaced.
It would also send the wrong signal to consumers, he said.
"Indeed, this may leave people more exposed to global oil price shocks if they believe they will be protected in future."
Total Environment Centre executive director Jeff Angel said the Government had fallen for a coal-fired power scare campaign.
"Polluting industries such as coal-fired power stations, energy-hungry smelters and land clearing get favoured treatment - this is a recipe for a scheme standing on weak legs," Mr Angel said.
The Australian Youth Climate Coalition said giving free permits to heavy polluters was "like telling smokers to quit while giving them free cigarettes".
THE SCHEME
STARTING DATE: 2010, probably from July 1.
COVERS: About 75% of Australia's greenhouse emissions, but with exemptions and compensation for some industries.
COMPANIES: The 1000 biggest polluting companies, which produce more than 25,000 tonnes a year, will bear the brunt of the cost.
MONEY RAISED: To go back to households and businesses
PETROL: Included in scheme, but drivers will pay no more for petrol for at least the first three years. Equivalent offsets for heavy truck drivers and agriculture and fishing industries.
COAL-FIRED POWER GENERATORS: To receive unspecified compensation (possibly free permits) BIG POLLUTERS: Those that compete internationally to be compensated. The dirtiest, such as the aluminium industr y, will get 90% of its permits free. Other, slightly less polluting industries, will get 60% of permits free.
AGRICULTURE: Excluded from scheme until at least 2015. After that,about 10% of total permits expected to be given free to rural sector.
FORESTRY: Can opt into the scheme voluntarily, receiving free permits to set up "carbon sinks". These could then be sold to polluters.
LAND-CLEARING: Not included, despite being a large source of greenhouse emissions.
INNOVATION
Climate Change Action Fund to help businesses become cleaner by encouraging low-emissions innovation and energy efficiency.
Electricity Sector Adjustment Scheme to help coal-fired power generators, on the grounds they will lose value. Money will go to so-called clean coal research and helping coal-communities, workers and firms adjust.
HOW IT WORKS
A limit, or "cap", will be placed on the amount of carbon pollution thatcan be emitted. Caps to be set five years in advance, with a "gateway" - or range - for another 10 years.
Big polluting industries and businesses, including oil companies, must buy a permit for each tonne of greenhouse gas they emit, giving an incentive to cut emissions.
Firms will compete for permits at auction, and be able to trade them later. Depending on the price, some will decide it is cheaper to find ways to cut emissions instead of buying permits.
A maximum carbon price will be set for the first five years.
Permits will be able to be used flexibly - "banked" and saved for higher-emitting years in the future, or "borrowed" from future years and used earlier.
Emissions will be measured, and permits worth the amount emitted must be handed in at the end of the year.
GARNAUT vs GOVERNMENT COMPARISON PETROL
GARNAUT: Included, likely to raise prices.
GOVERNMENT: Included, but price rises offset by cuts to petrol excise.
POWER GENERATORS
GARNAUT: No compensation, but up to $2 billion investment fund for cleaner coal industry.
GOVERNMENT: Direct assistance for coal-fired generators, plus investment support for cleaner coal industry.
LONG-TERM EMISSIONS TARGET GARNAUT: Government to set emissions limits that are increasingly stringent over time.
GOVERNMENT: Reduce 2000 levels by 60% by 2050.
TRADE EXPOSED INDUSTRIES GARNAUT: International agreements to be pursued as a priority, with assistance possible after 2012.
GOVERNMENT: Upfront assistance, including free permits.
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