http://www.theaustralian.news.com.au/story/0,20867,21811464-601,0...

http://www.theaustralian.news.com.au/story/0,20867,21811464-601,00.html


Carbon trading market 'as early as 2011'

* Matthew Warren, Environment writer
* May 29, 2007

A NATIONAL emissions trading scheme to reduce greenhouse gases could be introduced as early as 2011 if the Howard Government adopts a joint industry and government blueprint to be delivered on Thursday.

John Howard's hand-picked emissions trading task group is expected to recommend that revenue from the sale of emission permits to polluters be used to assist low-income households with higher power bills and to accelerate development of new low-emission technologies.

Peter Costello flagged assistance after this month's budget for low-income households forced to pay higher energy bills caused by the greenhouse gas-abatement measures.

The task group's report will trigger a comprehensive policy response from the Government following on from its energy white paper, handed down in 2004, which flagged emissions trading only after the emergence of an effective global strategy.

The Prime Minister yesterday repeatedly denied he had signed off on a $23million advertising campaign to sell the Government's looming policy response to global warming.

In parliament yesterday, Kevin Rudd asked Mr Howard to confirm that the proposed advertising campaign was to be called Climate Clever.

In reply, Mr Howard said: "I can assure the Leader of the Opposition that it won't be called 'Double standards out of hypocrisy'."

The task group's report is expected to be made public as early as next week, with any subsequent announcement by the Prime Minister launching up to two years of aggressive lobbying by industries over the detailed design of the multi-billion-dollar scheme.

An emissions trading scheme would allow companies that met a nationwide emissions cap - likely to be set by the federal Government - to sell emission permits. Polluters who could not meet their cap could buy permits to emit extra greenhouse gases.

Mr Howard has rejected the Labor premiers' plan for a national emissions trading scheme, saying the creation of a national scheme before a global trading mechanism was developed could harm Australian industry.

Key business submissions to the task group have backed the development of a comprehensive trading scheme provided it was part of a global program.

Treasury is expected to be given the job of co-ordinating the detailed design work for the trading scheme, with enabling legislation to be ready by 2009, trials and permit allocations in 2010 and a notional 2012 start date to coincide with the start of any post-Kyoto agreement.

The start date could be brought forward a year if a global trading scheme were ready.

Mr Howard acknowledged in a speech to the Business Council of Australia in Canberra last night he had not moved as quickly on climate change as some people wanted. He said it was now clear a national emissions market would be formed before a global scheme emerged.

He also predicted "a series of regional groupings" would precede a global market.

"I know it's appeared on occasions in the past six months that the Government has been not responding as rapidly as some people would have liked," he said. "I acknowledge that. But our response when it comes and it will come to this report, it will be a very speedy government response. It will be a response which will be seen as a mature, balanced, long-term response."

The task group's report will identify the need for improved greenhouse gas inventory procedures, increased action to develop forest sinks to absorb carbon emissions, and increased investment in research and development and energy efficiency measures.

At the APEC energy ministers meeting starting today in Darwin, Greenpeace will launch a report claiming that fast-developing economies such as China can maintain economic growth and stabilise greenhouse emissions by shifting new investment towards energy efficiency and renewable energy.

The Greenpeace report claims energy efficiency measures can halve energy demand across the OECD-developed countries in the Pacific, including Australia, by 2050, with renewable energy able to deliver nearly 70 per cent of electricity supply.

There is understood to be some disagreement within the Prime Minister's task group about the level of detail of its report, and in particular whether existing government modelling by the Australian Bureau of Agricultural and Resource Economics on the economic impact of climate change policy should be included.

The report will include modelling commissioned by the task group from economic consultants ACIL Tasman, which looked at the impact a trading scheme would have on electricity prices.

There has been debate about whether the task group should recommend the setting of a long-term aspirational emissions reduction target. The Government has repeatedly criticised Labor for committing to a target of cutting emissions by 60 per cent by 2050 without any supporting analysis.

But the report is expected to recommend an abatement trajectory that starts just below current emissions and moves to deeper cuts over time, with wide coverage across the economy.

This will create problems for sectors such as agriculture and land use, which account for about 23 per cent of Australia's greenhouse emissions but face measurement uncertainty and high compliance costs.

Deloitte director Lorraine Stephenson said any exclusion of major sectors such as agriculture would increase the cost for covered sectors such as electricity.

She questioned whether emissions trading was the right policy for the transport sector, because it would require huge price rises to change behaviour.

The Council of Australian Governments has backed mandatory reporting from next year for firms emitting more than 25,000 tonnes of greenhouse gases a year.