Australia Takes Steps to Move Toward Caps on Emissions

By RACHEL PANNETT
CANBERRA, Australia -- The government announced interim measures that could ensure swift passage of laws setting a mandatory renewable-energy target for the country, despite the failure of a related bid to cap greenhouse-gas emissions.
Lawmakers Thursday rejected plans to introduce a cap-and-trade program in July 2011 -- similar to one operating in Europe since 2005 -- that would limit Australia's carbon-dioxide emissions, forcing heavy polluters to buy so-called carbon permits to account for their emissions.
That move also jeopardized plans to require that 20% of Australia's electricity be generated from renewable sources by 2020, from less than 5% now -- even though lawmakers broadly supported the renewable energy bill -- because the two pieces of legislation were linked.
The center-left Labor government has vowed to bring back the cap-and-trade legislation for a second vote in November. But industry groups fear that any further delay in implementing the renewable-energy target could curtail investment.
Climate Change Minister Penny Wong Sunday announced interim industry assistance under the renewable-energy target that will unlink the two bills until the Senate passes the cap-and-trade one. If that plan hasn't passed by Jan. 1 -- when expanded renewable-energy targets starts -- interim aid will go to certain sectors that are high energy users and exposed to international trade.
Write to Rachel Pannett at rachel.pannett@dowjones.com