Aust has unveiled plans for an emissions trading scheme, which environmental critics say is too soft, and business lobbies warn will kill investment in key industries. The scheme will include 1000 of Aust’s biggest-emitting companies and will come into effect in July 2010. It is expected to generate up to $A20bn a year for the Govt, which is promising to give the money back to low-income households to offset price increases in electricity and other goods and services. Prices are expected to rise 0.9% in the first year of the scheme, assuming a carbon price of $20/tonne. Fuel taxes will be cut, so petrol and diesel prices will not rise at the pump.

The Govt will also give grants to companies in energy-intensive industries such as electricity generation, cement and aluminium, to help them remain competitive with manufacturers in other parts of the world. Industries generating 25% of Aust’s emissions will be given 90% of their permits free, and those generating a further 12.5% of Aust’s emissions stand to get 60% of their emission permits free, at least for the most energy-intensive parts of their activities. The agriculture sector will be exempt until 2015. The Govt has not yet announced an overall emissions cap, or set a price per tonne of carbon emissions, which are expected to be finalised in December.

Greenpeace says the scheme will do little to curtail emissions and will essentially prop up “dirty” industries, such as coal-fired electricity generation, allowing them to maintain the status quo. Environmental campaigner Guy Pearse notes while the free permits are intended to prevent “carbon leakage” of emission-intensive industries out of Aust, the scheme is so soft it will go further and actually “encourage carbon-intensive industry to leak into Aust.”

Meanwhile, business leaders are worried the proposed scheme will kill new investment in emissions intensive industries, on which Aust’s economy is built. For example, Woodside Petroleum CEO Don Voelte is warning more than $60bn in planned LNG investment in Western Aust could be shelved. Particularly worrying for Aust business is the September 10 deadline for submissions on the proposed ETS, while Treasury’s costings are not expected until October at the earliest.
So business will be largely in the dark when making submissions. Unions are also worried. The Aust Workers’ Union, the country’s largest blue-collar union, estimates the cost to the aluminium industry alone in job losses could range from $A285m to $A1.124bn.

Surprisingly, the Liberals have found little to criticise in the proposed scheme. In fact, the Liberals seem to be in disarray on climate change policy. Leader Brendan Nelson initially stated Aust should not act until big emitters like China lead the way, but he was pulled back into line by his party’s finance spokesman Malcolm Turnbull and environment spokesman Greg Hunt. Now, the Liberal’s policy essentially seems to be a carbon copy of Labor’s.

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