JOHN Howard last night signalled the Coalition was prepared to accept a long-term target for cutting greenhouse gases.
On the eve of receiving the report from his task group on emissions trading, the Prime Minister gave his strongest indication yet that the Government was prepared to adopt a target to cut emissions.
However, in his address to the Mineral Council of Australia last night, Mr Howard said he would protect the "powerhouse of the Australian economy" if he did accept a long-term target. "We do not intend to embrace a target plucked out of thin air," he said.
The Coalition has long resisted setting targets for cutting greenhouse gases, criticising Labor for adopting its target of a 60 per cent reduction in emissions by 2050 without detailed analysis of its likely effect on the economy.
Labor attempted to trump Mr Howard before he receives the emissions trading taskforce report today, with Kevin Rudd yesterday announcing a Labor government would if elected create an emissions trading system by 2010, foster an Asia-Pacific carbon credit scheme to stop deforestation, and direct commonwealth departments to buy clean energy.
The Opposition Leader has also ordered his own hybrid car, which runs on a combination of electricity and petrol.
The Prime Minister, armed with recommendations from his taskforce report, is likely to commit Australia to an emissions trading scheme to cut greenhouse gases but had been expected to defer any decision on a long-term emissions target.
Australia's top 100 companies yesterday released a report saying a credible long-term emissions reduction target was at least a year away because it would require detailed analysis of the costs and benefits before being implemented.
Mr Howard's signal that he was now prepared to adopt a longer-term emissions target came only hours after playing down the prospect in parliament. He said he was "preaching to the converted" at the annual dinner of Australia's mining companies, and would not impose a greenhouse policy that damaged the economy or the mining industry.
But Mr Rudd last night told Canberra's Belconnen Labor Club that the Coalition had squandered the opportunity to act on the climate change issue since 1997 and could no longer be trusted. "The challenge of climate change requires a fundamental shift in our political thinking - it demands a response premised entirely on the future but with steps taken now to get there," Mr Rudd said.
While the Howard Government has allocated $200 million to help develop a strategy to stop clearing forests, primarily with Indonesia, and will make deforestation a central part of the APEC discussions, Mr Rudd said more should be done to have the issue at the centre of the post-Kyoto global climate change agenda.
He said the World Bank had estimated $25 billion was needed to reduce global deforestation - responsible for a quarter of all emissions - by 10 to 20 per cent.
"But $200 million won't be enough to establish a global initiative - particularly with just one member: Australia," Mr Rudd said. "If deforestation is included as an activity that can create offset credits, there are immediate incentives to halt deforestation."
The emissions trading report is expected to suggest an emissions trading system could be up and running by 2011. It is also expected to say revenue from the sale of emission permits to polluters should be used to assist low-income households with higher power bills as well as to accelerate development of new low-emission technologies.
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 task group includes representatives of big companies such as BHP Billiton, Xstrata, Qantas, Alumina and National Australia Bank. They are members of the BCA, which is strongly pushing for a "cap-and-trade" system.
The cap-and-trade system allows business to emit a certain amount of carbon without cost, but it has to pay or earn credits for any emissions above that. The approach is seen as crucial to limiting the immediate economic harm of any emissions trading system.
Mr Rudd last night released five principles for any emissions trading system. He said a cap-and-trade system must be internationally consistent, economically responsible, fair, it must reduce emissions and recognise the need for immediate action.
A Labor government would lead by example by using its purchasing power to "provide a market for new efficient technologies", he said.
As part of the push, Mr Rudd announced the creation of a $50million Australian Solar Institute in the heart of coalmining territory, Newcastle in NSW, and the same amount to study sourcing power from the planet's internal heat, known as geothermal drilling.
Despite his promises on a trading scheme, the BCA produced a report directly at odds with Labor's target of a 60per cent reduction in greenhouse gas emissions by 2050.
The report paves the way for a deferred target and signals the start of a protracted debate by different industries and interest groups over the detailed design and development of the seemingly inevitable creation of an emissions trading market in Australia.
The likely auctioning of a significant tranche of emission permits will generate a multi-billion-dollar income stream for government, which could trigger debate about reform of the existing tax system in Australia.
The BCA report says Australia should introduce a three-tiered regime of emissions targets set by a new Reserve Bank-styled emissions agency, which would set fixed five- to 10-year targets, further interim gateway emissions targets and then a long-term target of at least 30 years in the future.
The targets would need to be reviewed and changed according to changes in the climate science, technology or international policy settings.
The report, by Port Jackson Partners, says a trading scheme should replace specific renewable energy targets, but still allow schemes that directly address market failures, including research and development into new technologies such as solar and clean coal and assistance for energy efficiency.
In parliament yesterday, Mr Howard called for a pragmatic international pact on climate change to succeed the "deeply flawed" and "Euro-centric" Kyoto Protocol.
