Emissions Trading Scheme delayed

Prime Minister Kevin Rudd recently announced that the Federal Government will delay its emissions trading scheme by one year. The government had also decided it would consider altering its carbon reduction target range of 5-15% to 5-25% of 2000 emission levels by 2020, but only if there was a global agreement to limit the concentration of greenhouse gases in the atmosphere to 450ppm. At the same time the government is talking about increasing the subsidies to so called trade exposed, highly emissions intensive industries from a 90% to 95% free allocation of permits for 5 years, or from a 60% to 70% free allocation for industries in the second category of heavy polluting industries. The government has also stated that it would set a very, very low price of $10 per permit for the first period of 2011 and 2012.

Before this announcement the Australian Greens had made an offer to the government to break the political impasse on emissions trading, moving the minimum reduction level they would accept from 40% to a range of 25 to 40%. The Greens set the 25% minimum reduction as it is the lowest absolute figure accepted by scientist as environmentally credible, the target recommended in the Garnaut report, the bottom end of the Bali negotiating range for rich countries (25-40%) and is achievable at the same costs to the overall economy as a 5% reduction according to the government's own modeling.

Although the emissions trading scheme had major issues, such as the miniscule target and massive transfer of wealth to the heavily polluting industries, the emissions trading scheme was one of the differentiators between Liberal and Labor policies at the last election. Only 6 months ago Penny Wong stood up at the global climate conference in Poland and told the conference that "in 2010 Australia will implement our comprehensive carbon pollution reduction scheme. It will reform and transform our economy".

The government faces a major challenge to get the ETS legislation through the senate when parliament returns. It seems that it will try to do this by appeasing big business and aligning themselves with the party they replaced rather than fulfilling the commitment they made to voters when elected.

by Andrew Barson, Projects Director at the Carbon Reduction Institute