After an epic but apparently relatively uncontroversial joint partyroom meeting, Malcolm Turnbull emerged at 8.00pm in Parliament House tonight to delcare he’d received support from the Coalition backbench to negotiate a series of amendments with the Government over its Carbon Pollution Reduction Scheme.

The full list of amendments is below.

The key amendment is a massive increase in compensation for emissions-intensive trade-exposed industries, both lowering the threshold at which industries receive compensation and boosting compensation for all recipients to 94.5% of permits free, including those currently scheduled to receive 66% of permits free.  UPDATE: A back of the envelope calculation suggests it would cost at least $350m more in the first year of the scheme to provide 94.5% of permits to all heavy polluters based on a permit price of $25; more each year thereafter, rising to close to $500m pa after five years. The Coalition amendments would also extend compensation indefinitely until 80% of competitors overseas had implemented “carbon abatement measures”.

This massive increase in compensation will cost several billions dollars and negate what little effect the CPRS might have had on sending price signals to Australia’s biggest polluters.

However, the Coalition has left the way open for a deal with the Government on power generation, saying it remains committed to an intensity-based approach – meaning coal-fired generators would only be forced to buy permits above a best-practice energy efficiency level – but accepting the possibility of an alternative approach from the Government to cushion the impact of electricity price rises on small business.

The Coalition also wants to triple compensation to electricity generators to $10b over 15 years, versus $3.6b over five years under the CPRS.

It also supports an unspecified “voluntary offset market” to enable individual voluntary action to count towards carbon reduction targets.

The Government is likely to be inclined to seriously consider that, and the removal of agriculture from the CPRS, and a deal on coal mine emissions.  Assistance for small business of some kind can probably be agreed.  The truly massive increase in compensation, however, is likely to be a major stumbling block.  Well is just as well, because if the Government readily agreed to the package, it would lead to the next stage of the conflict between Turnbull and his internal opponents on the issue.



Trade Exposed Industries

  • Amend the CPRS to provide a single level of assistance for emissions intensive trade exposed (EITE) industries at 94.5 per cent until 2015 and 90 per cent thereafter.
  • Lower the threshold for assistance from the CPRS proposal of 1000 tonnes of CO2 per $1 million of revenue to 850 tonnes of CO2 per $1 million.
  • Continue to provide assistance to Australian EITE industries at 90 per cent until 80 per cent of their international competitors have also implemented carbon abatement measures.
  • Include primary food processing such as dairy and meat in the EITE scheme.
  • Allow industries that include a series of sequential or parallel production processes to have these assessed as a single activity in determining assistance.


  • Permanently exclude agricultural emissions from the CPRS.
  • Obtain Government agreement to introduction of an agricultural offset scheme in line with similar offset schemes to be introduced in comparable economies such as the US and EU.

Coal Mine Emissions

  • Exclude coal mine fugitive emissions from the CPRS.
  • Provide the Minister with authority to use regulation to control fugitive emissions with the objective of achieving a 30 per cent reduction by 2025 as technology and international best practice allow.

Lower Electricity Prices

  • The Coalition will continue to advocate an intensity-based cap-and-trade model for generators.  This delivers the same emissions cuts as the CPRS but with a much smaller increase in electricity prices.
  • This would greatly reduce the burden on small and mid-sized businesses, which receive no compensation for higher power bills under Labor’s proposals.
  • Under the CPRS retail electricity prices will rise by close to 20 per cent in the first two years.  Under an intensity approach, retail electricity prices would rise by less than 5 per cent in the first two years.
  • If the Government continues to refuse to consider the intensity model, the Coalition will negotiate for an alternative approach to cushion near-term electricity price increases for small businesses.

Compensation for Electricity Generators

  • Coal-fired generators must be better compensated for loss of value they experience from the CPRS, to ensure security of electricity supply and enable them to transition to lower emission energy sources.
  • The CPRS offers coal-fired generators 130 million permits over five years worth $3.6 billion.  Yet three respected private sector analysts estimate their losses at $9–$11 billion.
  • Assistance should be increased to 390 million permits over 15 years (or about $10 billion).  Assistance should be allocated to all generators in proportion to the losses they suffer.
  • In the absence of access to the Government’s secret Morgan Stanley report, this represents the Coalition’s best estimate of appropriate generator compensation given the available data.

Energy Efficiency and Voluntary Action

  • The Coalition will negotiate for a national “white certificate” energy efficiency scheme so households and businesses earn credits for efficiency measures, and contribute to reducing national emissions.
  • Likewise, the Coalition supports creation of a voluntary offset market in advance of the introduction of the CPRS, and amending the CPRS to ensure voluntary abatement leads to a lower national level of emissions.