The Coalition’s reliance on the passage of US emissions trading legislation to delay a vote on, and justify further weakening of, the Government’s ETS may yet become problematic if a scheme similar to current Waxman-Markey bill that narrowly passed the US House of Representatives last Friday gets through the US Senate.

The Coalition’s rather changeable position on the Government’s ETS is based on a delay until after the Copenhagen conference later in the year and the passage of an ETS bill in the US, to where Coalition ETS point man Andrew Robb has headed for a second time to get across how the American debate is proceeding. The delay is important for Turnbull to secure sufficient support within his own ranks for the ETS, possibly with the help of some amendments to reduce or remove whatever burden on industry remains in the current Bill. It’s also an argument straight out of the protectionist manual: we should do no more than what other countries do.

But a comparison of the American Clean Energy and Security Act in its current form and the Rudd Government’s Carbon Pollution Reduction Scheme by the Australian Conservation Foundation shows the US version in its current form has significantly less industry assistance and is far better targeted at reducing emissions and increasing energy efficiency.

The ACES emissions targets (the Americans win on acronyms alone), based on 1990 levels, are 17-23%, compared to 4-24% under the CPRS; based on 2000 levels, which the Rudd Government uses, the comparison is worse: 27-32% under ACES, 5-25% here).

And despite criticisms about rentseeking and ineffectuality, the US bill has a different and more stringent approach to industry assistance. Trade-exposed industries will receive a maximum of 11% of permits under ACES, with industry bearing the risk that their emissions will be greater than the level for which they have been allocated permits. Under the CPRS, EITEs will receive 28% of permits and there will be no cap – if EITE companies expand, they will be given more free permits, meaning there is a risk the Government will have to call on budget revenue rather than permit revenue to fund its commitments under the CPRS.

The price of permits under ACES also won’t be capped: the CPRS has a ceiling on permit costs ($10 in the first year, $40 indexed thereafter). Under ACES, there will be no limit on carbon prices, but 2% of permits would be kept as a “strategic reserve” for release if the price increased too far or too quickly. The US bill also avoids the trap the Rudd Government fell into when it released its Green Paper at the height of last year’s petrol price hysteria, prompting it to promise to negate the effect of the CPRS on petrol prices, which will cost 17% of permit revenue. Under the US scheme, oil companies would be given 1.4% of permits, with no obligation to offset the increase in the bowser price.

The electricity sector would, like the local version, receive assistance under the US bill, but it would primarily be directed at energy retailers to fund energy efficiency programs aimed at reducing long-term electricity demand, rather than a direct, no-strings attached handouts like the electricity generation industry will receive here, or that households will receive to compensate for increased power costs. The Greens proposed a similar link between compensation and household energy efficiency measures here last year, to no avail. The American scheme would also provide up to 8% of permit revenue to developing countries to assist in emissions reduction, and direct permit revenue into energy efficiency and new technology research (including carbon capture and storage), and even funding for adaptation measures.

The most telling comparison is that 76% of permits under ACES are directed toward “clean, green and fair” purposes – energy efficiency, new technology, assistance for low-income earners – compared to 45% of revenue under the CPRS.

The US bill has come under heavy and familiar fire from all sides for its generosity to polluters, its likely lack of impact on emissions and predicted consequences for American jobs. It will almost certainly need to undergo amendment if it is to pass the US Senate, but it will need to be weakened substantially if it is going to be comparable in terms of its assistance to big polluters. If it doesn’t, the Coalition will be left with the task of explaining why, having elevated the passage of the US bill to critical status for its consideration of Australia’s ETS, it wants to wants a version even weaker than the Americans’.

The Government should also have some explaining to do. If a better bill than ours can emerge from the frenzy of lobbying and rent-seeking that is the US Congressional process, it clearly hasn’t tried hard enough to get a real ETS through.