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Australian Senate Postpones Government's Emissions Trading Scheme

Thursday, February 25, 2010

The Australian government’s proposed emissions trading scheme (ETS) was delayed further when the Senate, instead of rejecting it as previously, decided to postpone any debate on it until May this year, at the earliest.

The situation in Australia on climate change is that, although it is agreed that Australia’s carbon emissions should be reduced by at least 5% by 2020 (using 2000 as the base year), there is disagreement on the means by which this should be achieved. Therefore, after an accord with the government on the ETS was ended by the opposition, it was rejected by the Senate for a second time at the beginning of December last year.

Under the ETS, the government would have introduced an Australian emissions unit auction charge, the cost of which would have been established in the first half of 2010 through an auction mechanism. Businesses emitting greenhouse gases would have needed to purchase a permit based on that charge for the volume of gases each produced. The scheme was scheduled to start on July 1, 2010.

In the meantime, the Green party recently proposed that a two-year carbon price be implemented as an interim measure, in the transition to an ETS. This, it said, could help in providing time for the ETS to be re-discussed after this year’s general elections.

The opposition, on the other hand, have now said that the emissions reduction target could be achieved without “a great big tax”. It says that, in its climate action policy, incentives would be provided for Australian families and businesses to reduce their carbon emissions and there would be a focus on “direct action” to improve Australia’s environment.

The government re-presented the ETS into the House of Representatives when parliament reassembled this month. It was passed by the House where the government has a majority, but it was known that it had little chance of being accepted in its unchanged form in the Senate, where the government continues not to have sufficient votes.

After the further delay in the Senate, the Australian Industry Group (Ai) has expressed the opinion that the chances of adopting an ETS in the short term appear remote. Ai Group Chief Executive, Heather Ridout, said: "The Ai's National Executive resolved today that given the fracturing of the domestic consensus on climate change policy and the failure of international negotiations, there is great uncertainty around how to progress this issue and no clear way forward."

Although all parties have agreed on a climate change target, she was uncertain how this will be achieved. However, in the longer term, Ai continues to see a market-based approach as having the most potential to deliver least cost abatement.