Scheme too kind by half to emitters: Think-tank

Canberra Times
Wednesday 17/12/2008 Page: 7

The Rudd Government's carbon trading scheme has boosted support for high-emission industries by 50% over levels outlined in its previous draft scheme, a climate policy research group says. The Climate Institute Australia, an independent Sydney-based climate policy think-tank, says the Government's final version of the scheme has increased assistance to polluters by $4.1 billion while "more than halving" energy efficiency requirements. "This is corporate welfare without the corporate clean-up," the institute's chief executive, John Connor, said.

An analysis of the Government's emissions trading scheme revealed free permits and support for high emitters amounted to $4.24 billion in 2010, rising to $8.61 billion in 2015 and $12.25 billion in 2020. Mr Connor said this scale of assistance "dwarfed" the estimated investment of $5.2 million a year needed to fund energy efficiency measures and clean energy infrastructure and help achieve a 25% cut in greenhouse emissions by 2020.

The Government has set midterm targets of a 5% to 15% cut in emissions by 2020. The white paper argues that this translates to a higher per capita cut in emissions than the EU target of a 20% cut by 2020.

Mr Connor said, "Economic studies have shown that a comprehensive energy efficiency package would generate up to 40,000 jobs and save almost $2 a day on household energy [bills]. There are also major savings in the residential, commercial and manufacturing sectors - possibly tip to 73%, 70% and 46% respectively." Federal Climate Change and Water Minister Penny Wong has defended the Government's new industry assistance arrangements, saying "no polluter, no firm gets a free ride".

The Government's white paper makes eight significant changes to the assistance program for high emission industries as outlined in its previous draft green paper. These include extending the 60% threshold for assistance to industries with lower levels of emissions intensity. This will open up assistance - including free permits and tax breaks - to more than 40 industries.

Aluminium smelting, cement, lime, silicon, iron and steel manufacturing and petroleum refining are among the high-emissions industries qualifying for assistance. New additions are pulp and paper, plastics, chemicals and glass manufacturing. Senator Wong said, "We have put in place assistance for Australian firms who are exposed on world markets and who bear significant costs under the scheme.

"But no one gets a free ride; they all have to contribute; they all have to pay a price to some proportion for the pollution they put into the atmosphere, for the first time. They haven't had to do that before." When the scheme begins in 2010, emissions-intensive industries will be allocated 25% of carbon permits, a proportion that could rise to 45% by 2020.

The white paper says, "In contrast, in the green paper it was expected that assistance to [emissions-intensive industries] would commence, and remain, at equivalent to around 30% of the total permit pool."