Homes will be given energy tax incentives

Sydney Morning Herald
Tuesday 5/5/2009 Page: 4

HOUSEHOLDS will be able to claim some of the cost of reducing their greenhouse gas emissions as tax deductions under a new Carbon Trust unveiled yesterday. The Federal Government will put $75 million into the trust as part of its amended emissions trading scheme. This is aimed at helping both businesses and households reduce their energy use by switching to renewable forms of power or installing solar hot water systems.

But environmental groups criticised the plan, saying it placed too great a cost on reducing overall emissions. The Carbon Trust is based on a British model that pays businesses for the cost of any greenhouse-saving measures. Businesses will repay the Government with savings created by using less power. The household version will be called the Energy Efficiency Savings Pledge Fund and will rely on voluntary action.

Households will be able to calculate their emissions on a website and then promise to reduce them by, for example, installing a rooftop solar system. They can go further by donating any amount of money towards buying carbon permits which will then be removed from the market and no longer available to businesses. It is a new measure aimed at lowering Australia's overall emissions.

But the Australian Conservation Foundation's climate change program manager, Tony Mohr, said it was a costly exercise that would charge individuals twice - first to reduce their emissions and then to buy the carbon certificate. "People are already making the effort to go ahead and buy the hot water system or put in place the energy efficiency measures." Mr Mohr said.

It is a bit of a double-ask. On the one hand you want people to go ahead with the energy efficiency project and then to go ahead and pay money for the certificate over and above that for the emissions to be retired." Mr Mohr said it was unlikely people would buy carbon certificates once they had already reduced their emissions. He said the Government should take a more pragmatic approach to the overall target. "There is another way to go about that and that is for the Government to simply reset the target to accommodate people's voluntary actions."

The Carbon Reduction Institute, which certifies businesses for carbon reduction projects, said previous schemes to help people lower their emissions had lacked transparency. Its managing director, Rob Cawthome, said: The risk you've got in [reducing emissions] through the trust is that you're actually transferring liability over to the Government and they don't give me confidence that they will actually do anything."

The Government has also promised to include participants in the Greenpower scheme in the emissions trading system. Any contributions to the fund would also be tax deductible.

Key points:

• Commissions trading to start on July 1, 2011 instead of 2010
• A one-year introductory fixed price of $10 per tonne
• Increased compensation for industry such as aluminium and cement
• Households to be able to claim energy-saving measures as tax deductions
• Government to offer business grants to become more energy efficient
• Commitment to consider increasing the greenhouse reduction target to 25% by 2020