GREEN PAPER REPRIEVE FOR SOME, BUSINESS CAUTIOUS
17 July 2008
Mathew Murphy, energy reporter
COMPENSATION will be offered to coal-fired electricity generators and free permits given to many trade-exposed emissions-intensive industries, but business says it needs more detail before it can assess the full impact of the Government's proposed emissions trading scheme.
The Federal Government's green paper on emissions trading estimates that about 1000 of Australia's largest companies, individually producing more than 25,000 tonnes of carbon per year, will be caught in the net of the Carbon Pollution Reduction Scheme.
Climate Change Minister Penny Wong said up to 30% of carbon permits would be allocated to emissions-intensive trade-exposed activities. Those with an emissions intensity above 2000 tonnes of carbon per million dollars of revenue, including aluminium smelting, cement production and beef and sheep production, will have an initial assistance level set at about 90% per unit of output. Those companies producing more than 1500 tonnes of carbon but less than 2000, such as alumina refining, parts of the oil and gas sector and pig production, will have an assistance level of about 60%.
"The Government proposes to allocate these permits on the basis of the most emissions-intensive activities that lead to the production of trade-exposed products, rather than on the basis of a firm or industry level," the green paper says.
The Australian Chamber of Commerce and Industry, the Australian Industry Group and the Business Council of Australia all welcomed the report but called for more detail.
"The green paper provides the basis for ongoing discussions with the Government, but the devil remains in the detail in terms of whether the options put forward will achieve the twin objectives of sustaining growth while meaningfully reducing emissions," BCA president Greig Gailey said.
Greg Evans, ACCI's director of industry policy and economics, said Treasury modelling, expected in October, would provide a clearer picture.
"The critical aspects of that Treasury modelling will indeed be the economy-wide implications of an emissions trading scheme and also the particular compliance costs," he said.
Heather Ridout, AiG chief executive, said the scheme "ticks the right boxes."
"There remain, however, a wide range of details that require elaboration and we welcome the Government's commitment to further close consultation with industry," she said. "In particular, the adequacy of the approach to address trade-exposed emissions-intensive activities put forward in the green paper needs careful further analysis."
The Government said it would issue free permits or give a one-off cash bonus to coal-powered electricity generators.
National Generators Forum executive director John Boshier said he was happy that the Government had rejected Professor Ross Garnaut's view that generators should not be compensated.
"We welcome the ... green paper because the move to a low-emissions profile will require investment of tens of billions of dollars as well as the commercialisation of new low-emissions technology," he said.
BP said it was supportive of the inclusion of petrol in the emissions trading scheme but said the Government's proposal to offset price increases with cuts in fuel excise was "a matter for them".
Fiona Wain, chief of Environment Business Australia, said the proposed Climate Change Action Fund would help business make the transition to a low-emissions economy.
"It is quite closely aligned to what we proposed in way of a climate bond.
"I would like to see the inclusion of Ross Garnaut's proposed support for R&D, which appears to have been left out," she said.
KEY POINTS
Coal-fired electricity generators welcome plans to compensate them under an emissions trading scheme.
Business leaders say they would like more detail.
LINK Go read the green paper, go to http://www.climatechange.gov.au/greenpaper/index.html
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