Canberra sees cost benefit in CO2 trades

ByFiona Harvey
Published: October 20 2008 01:34

Australia will press ahead with a national carbon trading scheme in spite of claims from businesses that it could damage their competitiveness.
Penny Wong, minister for climate change and water, told the Financial Times that the global financial crisis was not a reason to put off commitments to reduce emissions: “We were elected last year with a very clear commitment to emissions trading ... Australians have been clear that they want the government to take action.”
Penny Wong: any attempt to delay carbon trading would be counterproductive

She said: “Our view is that the economic case is against [any] delay [in introducing the trading scheme]. If you accept that the world will eventually move to a global carbon constraint, nations that have put in place the means to manage that will be in the best position.”
In Europe, where a carbon trading scheme has been operating since 2005, businesses have been lobbying for a watering down of the scheme. But European Union leaders last week reaffirmed their climate change commitments and decided to press ahead with tough emissions reduction targets.
Australia’s carbon trading scheme, which will cover about 70 per cent of businesses, is scheduled to come into effect in 2010. The government is consulting on the details of how it should work, with draft legislation likely early next year.
In December, the government will announce the country’s mid-term goal for cutting carbon emissions, which will dictate how many carbon permits are made available to companies covered by the trading system. The government has already committed to a 60 per cent cut in emissions by 2050.
Australia’s opposition parties this month called for the trading scheme to be delayed for up to two years. The Business Council of Australia has also warned that the scheme would put many companies at risk.
But Ms Wong said: “We are very conscious in particular of the need for business certainty.” She said any attempt to delay trading would be counterproductive: “Delay increases uncertainty at a time when we are seeking policy clarity to enable the transition [to emissions trading] to be made at the lowest cost.”
Australia’s planned Carbon Pollution Reduction Scheme would require companies to buy most of their emissions permits at auction. The government would soften the economic effect with a climate change action fund, directed towards changing manufacturing processes, and to industrial energy efficiency projects with long payback periods. There will also be a special adjustment scheme for the coal-fired electricity industry.
Australian companies could benefit by focusing on new technologies such as renewables and carbon capture and storage, Ms Wong said. Australia has large solar and wind resources and the government has pledged A$100m ($69m, €51m, £40m) a year for the development of carbon capture and storage technology.
CV: Penny Wong
1968 Born in Sabah, Malaysia, Moved to Australia aged eight. Graduated in law from the University of Adelaide, and began working for the Construction, Forestry, Mining and Energy Union
2001 Elected as a Senator for South Australia
2004-07 Member of the shadow ministry
2007 Appointed minister for climate change and water following election victory of the Labor party, led by Kevin Rudd. One of Mr Rudd’s first actions was to sign the Kyoto treaty
Copyright The Financial Times Limited 2008