Rob Taylor and James Thornhill, PlanetArk 17 Jul 08;
CANBERRA - Australia, the world's biggest per head polluter, unveiled plans on Wednesday to rein-in greenhouse gas emissions, but said it would shield some companies and motorists from a carbon emissions trading scheme expected to drive up inflation.
The centre-left government, which swept to victory last year on the back of fury among working voters at rising prices under conservative rule, released an options paper for how emissions trading is likely to work from 2010.
"The effect of putting a price on carbon will be profound," Climate Change Minister Penny Wong said in a national television address.
"Placing a limit and a price on pollution will change the things we produce, the way we produce them, and the things we buy. It will open new doors to a cleaner energy future," she said.
The government's plan aims to curb Australia's carbon emissions by forcing 1,000 of the country's biggest-polluting firms, including global miners BHP Billiton and Rio Tinto to purchase permits placing a cost on their emissions.
The regime would cover 75 percent of emissions in the A$1 trillion economy, with the inclusion of fuel from the 2010 start and hard-to-measure agricultural emissions from 2015, the government said.
But with officials predicting the scheme could add 0.9 percent to consumer prices in its first year, the proposals also pose deep political risks for Prime Minister Kevin Rudd in an economy already battling inflation at 16-year highs.
To ward off a ballot backlash in 2010, when the scheme is to come into force, Wong said low-income households would be buffered from inevitable price hikes through tax and welfare breaks.
Motorists angered by soaring fuel pump prices, already up by 30 percent in recent months as world oil prices soar to fresh records, would be mollified by "cent-for-cent" fuel tax cuts balancing price hikes coming from the emissions scheme.
With Treasury officials on Wednesday estimating the sale of permits could net government up to A$20 billion, big polluting energy firms would receive up to 30 percent of total permits free of charge, including agriculture, the government said.
The largest polluters, producing more than 2,000 tonnes of carbon emissions per A$1 million of revenue, would initially pay for only 10 percent of their total emissions. Companies producing between 1,500-2,000 tonnes would pay for 40 percent of emissions.
Assistance would taper off with time to allow companies to replace dirty technology with cleaner production methods, the report said.
Other energy-intensive firms like cement and aluminium manufacturers exposed to cheap competitors in Asia would also receive grants from a new Climate Change Action Fund to be set up with the proceeds of emission permit sales.
Environmental critics and the government's top climate adviser, who two weeks ago recommended no assistance for motorists or major polluters, will accuse Rudd of taking too soft a line on climate shift.
The report did not say what Australia's overall emissions cap should be, or place a price on carbon emissions apart from a working assumption of A$20 a tonne, used for the inflation estimate.
The government is to release those figures, which will set the market price, later this year ahead of laws to go to parliament in early 2009 setting up the emissions scheme. (US$1=A$1.02)
Australia Scheme to Compensate Big Carbon Emitters
Rob Taylor and James Thornhill, PlanetArk 17 Jul 08;
CANBERRA - Australia on Wednesday unveiled plans for one of the world's biggest carbon trading schemes, including measures to protect motorists and large companies from higher costs which drew the ire of green activists.
The centre-left government, which swept to victory last year on the back of fury among working voters at rising prices under conservative rule, released an options paper for how emissions trading is likely to work from July 1, 2010.
"The effect of putting a price on carbon will be profound," Climate Change Minister Penny Wong said in a television address. "Placing a limit and a price on pollution will change the things we produce, the way we produce them, and the things we buy."
Australia is the world's biggest per-head polluter, with each person producing five times more emissions than the average in China.
The government's plan aims to curb carbon emissions by forcing 1,000 of Australia's biggest-polluting firms, including global miners BHP Billiton and Rio Tinto to buy permits placing a cost on emissions.
The regime would cover 75 percent of emissions in the A$1 trillion (US$980 billion) economy, with the inclusion of fuel from the 2010 start and hard-to-measure agricultural emissions from 2015, the government said.
But with officials predicting the scheme could add 0.9 percent to consumer prices in its first year, the proposals also pose deep political risks for Prime Minister Kevin Rudd in an economy already battling inflation at 16-year highs.
To ward off a ballot backlash in late 2010, after trading comes into force, Wong said low-earners would be buffered from inevitable price hikes through tax breaks and welfare.
Motorists angered by soaring fuel pump prices, already up by 30 percent in recent months as world oil prices soared to new highs, would be mollified by "cent-for-cent" fuel tax cuts to balance emission price hikes, to be reviewed every three years.
With Treasury officials estimating on Wednesday that the sale of permits could net government as much as A$20 billion, big polluting energy firms would receive up to 30 percent of total permits free of charge, including agriculture, the government said.
The largest polluters, producing more than 2,000 tonnes of carbon emissions per A$1 million of revenue, would initially pay for only 10 percent of their total emissions. Companies producing between 1,500-2,000 tonnes would pay for 40 percent of emissions.
Assistance would taper off with time to allow companies to replace dirty technology with cleaner production methods, the report said.
Other energy-intensive firms like cement and aluminium manufacturers exposed to cheap competitors in Asia would also receive grants from a new Climate Change Action Fund to be set up with the proceeds of emission permit sales.
DIRTY INDUSTRIES
Environmental critics accused Rudd of capitulating to the big polluting "greenhouse mafia" by compensating "dirty" energy firms after the government's top climate adviser two weeks ago recommended against assistance.
"All this proposed ETS does is prop up dirty industries, such as coal-fired electricity generation, allowing them to maintain the status quo. It will result in nothing more than paper shuffling," Greenpeace Climate spokesman Simon Roz said.
Climate experts said the scheme could be a model for Asia and fuse with an eventual global emissions trading system.
"What is good is that the coverage is broad. Unfortunately some parts of the science are crudely handled, and this matters in terms of its effectiveness," said Barry Brook, Director of the Research Institute for Climate Change and Sustainability at Adelaide University.
The report did not say what Australia's overall emissions cap should be or put a price on carbon emissions apart from a working assumption of A$20 a tonne, used for inflation impact estimates.
Emissions trade around the report's release indicated a soft start to the scheme in 2010, with initial prices starting at A$19-A$20 a tonne, but "speculative" buyers offering A$16, said Gary Cox, Manager of Environmental Derivatives at the Newedge Group in Sydney, which brokered one of six deals.
A Singapore-based carbon broker said the report contained no major surprises, but pointed to a broader scheme than in Europe, where 100 percent of emission allowances had been allocated free against only 30 percent in Australia.
The government is to release hard Treasury figures setting the market price in October ahead of laws to go to parliament in late 2008 setting up the emissions scheme. (US$1=A$1.02) (Editing by Jerry Norton)
FACTBOX - Timeline for Australian Carbon Trading
PlanetArk 17 Jul 08;
CANBERRA - The following is a chronology of events leading up to Australia's commitment to adopt a carbon emissions trading system, as well as a timeline for decisions remaining before the plan is finalised.
2007 - Former conservative government of John Howard proposes carbon trading by 2012, and promises a 15 percent clean energy target by 2020, up from its old target of 2 percent. His government announces a phase-out of incandescent light bulbs. But he refuses to ratify the Kyoto Protocol.
Labor's Kevin Rudd promises to ratify Kyoto, introduce carbon trading by 2010, and set a 20 percent renewable energy target by 2020. Labor also promises to cut emissions by 60 percent of 2000 levels by 2050, but does not set an interim emissions target for 2020.
Nov. 24 - Rudd leads the left-leaning Labor Party to victory at national elections, ending nearly 12 years of conservative rule.
Dec. 3 - Rudd is sworn into office, and immediately signs documents to ratify the Kyoto Protocol. Penny Wong is appointed Minister for Climate Change.
2008 March - Government-industry consultations start on emissions trading.
July 4 - Government adviser Ross Garnaut, an economics professor, releases his draft report on carbon trading after a 15-month inquiry.
July 16 - Climate Change Minister Penny Wong releases green paper on policy options for carbon trading.
September - Final Garnaut report due by Sept. 30.
October - Treasury modelling on the economic impact of carbon trading to be sent to government.
December - Public release of draft legislation. Government expected to announce emissions target for 2020.
2009 March to July - Carbon emissions laws considered by parliament.
- Ongoing consultation on carbon trading regulations. New laws to come into force in third quarter, 2009, and regulator to be established.
2010 July 1 - Carbon trading to start.
FACTBOX - Australia's Carbon Footprint
PlanetArk 17 Jul 08;
CANBERRA - Australia in 1997 signed the Kyoto Protocol, which set targets for developed countries to limit Greenhouse gas emissions, blamed for global warming, but did not ratify the agreement until December 2007.
Former conservative Prime Minister John Howard, who lost power after almost 12 years in office last November, refused to ratify the agreement, saying it would unfairly hurt Australia's economy and reliance on coal for energy and export income.
Left-leaning Labor Prime Minister Kevin Rudd signed documents to ratify the Kyoto Protocol on December 3, 2007, as his first official act after being sworn into power, and has promised to introduce carbon trading in 2010.
Under the Kyoto Protocol, Australia must limit emissions growth to 108 percent of 1990 levels by 2012. The country says it is on track to meet its Kyoto target.
Here are some details about Australia's carbon emissions.
* Australia's net Greenhouse emissions totalled 576 million tonnes of carbon dioxide equivalent, or about 1.5 percent of world emissions.
* Emissions in 2006 were 4.2 percent higher than 1990 levels, despite a 47 percent increase from stationary energy.
* Australia emits 28.1 tonnes of carbon per person, the highest per capita level in the developed world and five times more per person than China, due to use of coal for electricity.
* Transport and Energy account for 69.6 percent of Australian emissions, or 400.9 million tonnes.
* Stationary energy, which includes electricity generation, petroleum refining and gas processing, accounts for 49.9 percent of emissions, or 287.4 million tonnes.
* Transport accounts for 14 percent of emissions, or 79.1 million tonnes. Road transport and passenger cars accounted for 12 percent of national emissions.
* Agriculture created 15.6 percent of emissions, or 90.1 million tonnes.
* 10.9 percent of Australian emissions, or 62.8 million tonnes, come from sheep and cattle, due to gases produced when they digest food.
* Land use and forestry account for 6.9 percent of emissions, or 40 million tonnes, down more than 70 percent from 96.5 million tonnes in 1990.
* Carbon dioxide represents 74 percent of Australian emissions (427.8 million tonnes), methane 20.5 percent (118 million tonnes), and nitrous oxide 4 percent (24.2 million tonnes).
* The energy sector is the main source of carbon dioxide (86 percent), while agriculture is the main source of methane (59 percent).
* Australia is the world's biggest coal exporter, with coal used to generate about 77 percent of Australia's electricity. Poland, China and South Africa also rely on coal for more than 75 percent of electricity generation.
* Australia has the world's largest reserves of uranium and is a major uranium exporter, but has no domestic nuclear power.
* Limited carbon trading already exists in Australia. The New South Wales state introduced a Greenhouse Gas Abatement Scheme in 2003, which forces electricity suppliers to meet Greenhouse targets by investing in projects to offset emissions. The Australian Capital Territory has a similar scheme.
Sources: Australian National Greenhouse Gas Inventory; Australian Bureau of Agriculture and Resource Economics) (Reporting by James Grubel)
FACTBOX - Australia's Carbon Footprint
PlanetArk 17 Jul 08;
CANBERRA - Australia in 1997 signed the Kyoto Protocol, which set targets for developed countries to limit Greenhouse gas emissions, blamed for global warming, but did not ratify the agreement until December 2007.
Former conservative Prime Minister John Howard, who lost power after almost 12 years in office last November, refused to ratify the agreement, saying it would unfairly hurt Australia's economy and reliance on coal for energy and export income.
Left-leaning Labor Prime Minister Kevin Rudd signed documents to ratify the Kyoto Protocol on December 3, 2007, as his first official act after being sworn into power, and has promised to introduce carbon trading in 2010.
Under the Kyoto Protocol, Australia must limit emissions growth to 108 percent of 1990 levels by 2012. The country says it is on track to meet its Kyoto target.
Here are some details about Australia's carbon emissions.
* Australia's net Greenhouse emissions totalled 576 million tonnes of carbon dioxide equivalent, or about 1.5 percent of world emissions.
* Emissions in 2006 were 4.2 percent higher than 1990 levels, despite a 47 percent increase from stationary energy.
* Australia emits 28.1 tonnes of carbon per person, the highest per capita level in the developed world and five times more per person than China, due to use of coal for electricity.
* Transport and Energy account for 69.6 percent of Australian emissions, or 400.9 million tonnes.
* Stationary energy, which includes electricity generation, petroleum refining and gas processing, accounts for 49.9 percent of emissions, or 287.4 million tonnes.
* Transport accounts for 14 percent of emissions, or 79.1 million tonnes. Road transport and passenger cars accounted for 12 percent of national emissions.
* Agriculture created 15.6 percent of emissions, or 90.1 million tonnes.
* 10.9 percent of Australian emissions, or 62.8 million tonnes, come from sheep and cattle, due to gases produced when they digest food.
* Land use and forestry account for 6.9 percent of emissions, or 40 million tonnes, down more than 70 percent from 96.5 million tonnes in 1990.
* Carbon dioxide represents 74 percent of Australian emissions (427.8 million tonnes), methane 20.5 percent (118 million tonnes), and nitrous oxide 4 percent (24.2 million tonnes).
* The energy sector is the main source of carbon dioxide (86 percent), while agriculture is the main source of methane (59 percent).
* Australia is the world's biggest coal exporter, with coal used to generate about 77 percent of Australia's electricity. Poland, China and South Africa also rely on coal for more than 75 percent of electricity generation.
* Australia has the world's largest reserves of uranium and is a major uranium exporter, but has no domestic nuclear power.
* Limited carbon trading already exists in Australia. The New South Wales state introduced a Greenhouse Gas Abatement Scheme in 2003, which forces electricity suppliers to meet Greenhouse targets by investing in projects to offset emissions. The Australian Capital Territory has a similar scheme.
Sources: Australian National Greenhouse Gas Inventory; Australian Bureau of Agriculture and Resource Economics) (Reporting by James Grubel)
FACTBOX - Which Australian Firms are Big Carbon Emitters?
PlanetArk 17 Jul 08;
Australia issues a carbon Emissions Trading System options paper on Wednesday to help the country combat its greenhouse-gas emissions. It is already the world's largest carbon polluter per head of population.
The government says around 1,000 of Australia's biggest polluters will need to buy permits under an ETS, to be introduced by 2010, but it has not yet listed the names of these firms.
Here is a sector-by-sector list of some of the blue-chip companies that may be affected by the new scheme.*
FOOD AND BEVERAGE:
-- Coca-Cola Amatil
-- Foster's Group
-- Goodman Fielder
-- Lion Nathan
ENERGY:
-- Caltex Australia
-- Contact Energy
-- Origin Energy (electricity, LPG, natural gas, appliances)
-- Santos (oil and gas exploration)
-- Woodside Petroleum (petroleum exploration and production)
MINING:
-- Alumina
-- BHP Billiton
-- Oxiana
-- Newcrest Mining
-- Rio Tinto
OTHER:
-- AGL Energy (utilities, gas, electricity)
-- Amcor (packaging)
-- Boral (building materials)
-- Orica (mining, consumer products, chemicals)
-- Leighton Holdings (project development, contracting group)
-- Qantas Airways
-- Wesfarmers (retail conglomerate)
-- Woolworths (supermarkets)
STEEL MAKING:
-- BlueScope Steel
-- OneSteel
* These companies' exact carbon emissions are not known, but they all volunteered emissions data to the Carbon Disclosure Project. Several were also named by Citigroup as at risk because they have the highest operational exposure to carbon pricing.
Sources: Carbon Disclosure Project, Australia and New Zealand report 2007 (http://www.cdproject.net/currentreports.asp)
Citigroup Climate Change Report, Feb 2007 (http://www.aesltd.com.au/pdf/CitigroupClimateChangeReportFeb2007.pdf) (Writing by Gillian Murdoch, Beijing Editorial Reference Unit, Editing by Mark Bendeich)
