It’s a good but not great day in Australia’s battle against Climate Change. There are good elements to this scheme but the Government has fallen short at a few hurdles – namely the treatment of petrol, lack of support for developing countries and unclear incentives in investment in low-pollution technology. We welcome the fact that the scheme is to start in 2010 and that it will move to a full auctioning of permits. There is also a good and clear focus on support for low-income families.

What is not welcome is ripping out billions of dollars from the Climate Change Action Fund by reducing the petrol excise and it’s very unlikely this will ever be replaced. This means losing key funds to invest in areas such as public transport.

And as Professor Garnaut warned it also sent the wrong signal to consumers and business at a time when there was a need to become more fuel efficient.

It is also of concern that there are no clear signals that this scheme will assist investment in clean technologies in neighbouring developing countries which is so critical, not only to avoiding climate change, but also to our future economic prosperity.

Proposals to benchmark performance of trade exposed industries that are given free permits are welcomed but the benchmark needs to be against world’s best practice, not against the Australian industry average. The scope of any assistance to be provided to generators will need to come under very close scrutiny.

It’s important to acknowledge that to be starting an emissions trading scheme in just under two years this is a significant step forward but the targets and details will be critical to the final judgement.

 

Peter Fray

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