Highlights of Australia's climate-change policy

Reuters, Monday December 15 2008
CANBERRA, Dec 15 (Reuters) - Australia, the fourth-largest per-capita emitter of greenhouse gases, unveiled its long-awaited climate-change policy on Monday. Following are the key points:
EMISSION REDUCTION TARGETS & SCOPE
* Long-term goal of 5-15 percent reduction in carbon emissions from 2000 levels by 2020, equating to per capita cuts of 27-34 percent.
* The 15 percent target is contingent on a global agreement to make a similar reduction.
* National emission caps set in early 2010, covered by emission permits. For example, if there is an annual cap of 500 million tonnes of carbon, only 500 million tonnes worth of carbon permits will be issued in that year.
* Scheme applies to 1,000 firms covering 75 percent of total emissions.
* Broad coverage, including power generators, transport and oil and gas production, though agriculture to be excluded until at least 2015.
* Government to compensate for any rise in fuel prices arising from new policy. Airline industry will have to pay higher price, though could be eligible for other forms of compensation.
CARBON TRADING
* First carbon permits to be auctioned in the first half of 2010.
* Carbon permits to be freely traded, subject to an interim price cap of A$40 per tonne to prevent price shocks and unstable market.
* Estimated starting market price to be around A$23 per tonne if 5 percent long-term target adopted, or around A$32 if 15 percent goal adopted.
* Unlimited access to offshore carbon credits approved under Kyoto protocol but initially no exports of Australian permits.
ECONOMIC IMPACT
* Annual growth in gross national product to be trimmed to 1.1 percent under new policy, from 1.2 percent if nothing is done.
* One-off rise in consumer prices of around 1.1 percent, based on a carbon price of A$25 per tonne.
COMPENSATION
* Energy-intensive, exporting industries to receive free permits equal to between 60 and 90 percent of requirements, depending on a sensitivity ratio. Ninety percent assistance applies to those emitting 2,000 tonnes of carbon for every million Australian dollars of revenue; 60 percent to those emitting 1,000-1,999 tonnes for every million dollars.
* Industries likely to receive 90 percent free permits include makers of aluminium, cement, iron and steel, lime and silicon; those to receive 60 percent free permits include makers of alumina, petroleum and liquefied natural gas.
* Coal-fired power stations to receive direct assistance worth A$3.9 billion in free permits over five years, subject to a review aimed at preventing generators from making any windfall profits from any sale of permits.
* Government sets up fund to develop clean-coal technologies. (Reporting by Mark Bendeich; editing by Michael Perry)