Australia opposition proposes rival carbon scheme

James Grubel, Reuters 10 Aug 09;

CANBERRA (Reuters) - Australia's opposition rolled out what it said was a cheaper and greener plan to cut carbon emissions on Monday, just days before it was expected to vote down the government's stalled carbon trade legislation.

Climate Change Minister Penny Wong dismissed the scheme as a "mongrel" offshoot of a failed Canadian plan, and said the government was determined to pass its own emissions trading scheme (ETS), which is being watched around the world in the lead up to December's global climate talks in Copenhagen.

Laws for an emissions trading scheme (ETS) are set to be defeated in parliament's upper house Senate on Thursday, and could become a trigger for an early election if the opposition and minor parties reject the plan a second time later this year.

Opposition Leader Malcolm Turnbull, who is struggling in the polls and wants to avoid an early election, on Monday proposed a plan that would promise a carbon emissions reduction of 10 percent by 2020, based on 2000 levels.

That target, which hasn't yet been endorsed by his party, would put one of the world's most carbon-intensive economies at the low end of global efforts to roll back climate change.

The government is fighting to push through its own ETS scheme that includes a pledge to cut emissions by at least 5 percent -- or as much as 25 percent if other countries take equally firm action -- but needs an extra seven votes to pass its plan through a hostile Senate, which appears unlikely.

"We will press on with this reform for as long as we have to," Wong told the National Press Club. "One way or the other, we are going to get this through."

Rudd is due to face elections in late 2010, but could have the option of a poll in early 2010 if the Senate continues to block the ETS laws. The latest opinion polls show Rudd well ahead of the opposition, which is divided over climate policy.

RENEWABLE ENERGY

Under Turnbull's plan, Australia's coal industry and major export industries would receive full protection from the cost of purchasing carbon permits, compared to up 95 percent of free permits for major polluters under the government scheme.

Turnbull's scheme would see only 30 percent of Australian carbon permits auctioned, compared to 70 percent of permits auctioned under the government's plan.

"It shows with relatively modest changes, the proposed emissions trading scheme can be made far less harmful to jobs, investments, regions and the Australian economy," Turnbull said.

But Wong said Turnbull's proposals were a copy of a failed Canadian plan to set up a baseline for carbon emissions.

"It is not a credible alternative, it is a smokescreen," Wong said. "Rehashing the failed Canadian experiment puts at risk Australia's ability to meet its national targets."

Australia wants carbon trading to start in July 2011. Companies would have to buy permits for every tonne of pollution they produce, putting a price on emissions and providing a financial incentive to clean up pollution.

Meanwhile, Wong again ruled out separating laws for a 20 percent target for renewable energy from the ETS laws.

The renewable energy laws have wide political support, but remain locked in the Senate because compensation measures are linked to carbon trade laws. The Clean Energy Council said delays are costing business A$2 million ($1.7 million) a week.

The opposition and the Greens have said they would use their numbers in the Senate to remove the link between the two sets of laws, so the renewable energy target could pass, but Wong on Monday said the government wanted to keep the link.

"We need both. Australia needs both," Wong said.

Australia, the world's largest coal exporter, accounts for 1.5 percent of global emissions, but is one of the largest per-capita emitters due to a reliance on coal for 80 percent of electricity generation.

($1=A$1.20)

(Editing by Clarence Fernandez)

SCENARIOS: Possible outcomes for Australian carbon trade laws
Reuters 10 Aug 09;

CANBERRA (Reuters) - Australia's carbon trading laws are set to be defeated in the Senate this week, with conservatives, Greens and two independent lawmakers in rare agreement to oppose it.

Prime Minister Kevin Rudd's government needs seven more votes to pass the 11 bills through the Senate. If the laws are rejected twice, Rudd could call a snap election.

Here are some possible outcomes for the government.

HOLD FIRM, SET UP ELECTION TRIGGER (Likely)

If the government forces a vote in the Senate on Thursday, the laws in their current form will fail. If the Senate blocks or rejects the laws a second time, after an interval of three months, it will hand Rudd a trigger for a possible snap election. Rudd, who is well ahead in opinion polls, has repeatedly said he does not want an early election, but refuses to rule out the option.

Rudd could call a snap election in early 2010 and current opinion polls suggest he would win with an increased majority. He could then pass the carbon trade laws through a joint sitting of the lower house and the Senate to clear the political deadlock. The danger for Rudd is that while the carbon laws would pass a joint sitting, a future Senate could be more unpredictable with increased numbers of Greens and independents.

DEAL WITH OPPOSITION (Unlikely)

The government's best hope of passing the laws is to get the opposition, which has the largest voting bloc in the Senate, to change its stand and support the laws. The opposition wants to postpone a vote on the laws until after global climate talks in Copenhagen in December. But political pressure on the opposition is growing, and Opposition Leader Malcolm Turnbull's poll rating has collapsed.

Turnbull now wants to avoid forcing an early election on the carbon trade laws and has proposed negotiations on amendments.

The government is refusing to negotiate, but might be willing to make some concessions later in the year to get its laws passed ahead of the Copenhagen climate talks.

DEAL WITH GREENS, INDEPENDENTS (Unlikely)

The government's only other hope of passing the laws is to negotiate with the five Greens and two independents, who themselves pull in different directions. The Greens will only support the plan if the government makes a stronger commitment to curb greenhouse gas emissions. Independent Nick Xenophon also wants stronger emissions targets. The final independent, Steve Fielding, has said he does not believe human activity is responsible for global warming, and he is unlikely to support the legislation.

RENEWABLE TARGET SPLIT (Likely)

The conservatives and five Green senators also want to split off separate Renewable Energy Target laws, tied to the carbon trade scheme by the government through promised industry compensation for electricity generators.

The laws set a renewable energy target of 20 percent by 2020. The government joined the two pieces of legislation to pile more political pressure on Turnbull's conservatives.

The government could reject splitting the bills in the lower house where it dominates, even if the Senate decides to separate the two issues. But Wong and Rudd may be willing to accept the split next week, to unlock around $22 billion in planned solar and wind energy investment, once the carbon trade legislation is dealt with.

(Reporting by Rob Taylor; Editing by James Grubel and David Fogarty)