INSTANT VIEW 2-Australia revises carbon-trading scheme

Mon Nov 23, 2009 8:26pm EST

SYDNEY Nov 24 (Reuters) - The Australian government revised its plans to cut carbon emissions on Tuesday in order to win majority political support for the reform.

The changes will deliver more compensation to affected industries such as coal and electricity and will see an extra A$1.28 billion ($1.18 billion) in government expenditure on the cap-and-trade scheme, reaching A$7 billion by 2019-2020.

The opposition will decide later on Tuesday whether to support the changes and allow the carbon-trade laws to pass through parliament in a vote scheduled for this week.

COMMENT

RUPERT POSNER, AUSTRALIA DIRECTOR, THE CLIMATE GROUP:

"Overall, the most important thing is that we get the legislation passed this week so the prime minister can go to Copenhagen with legislation for the introduction of the emissions trading scheme. We need the momentum before Copenhagen, not after.

"This no doubt makes it easier for some of those large companies, but in the end those costs will be passed on to the consumer one way or the other. It ensures these companies come on board and we get something introduced sooner, not later, and deliver a better economic outcome."

MARTIJN WILDER, HEAD OF GLOBAL CLIMATE CHANGE TEAM, BAKER & MCKENZIE

"The really key interesting thing is that agricultural offsets are in and that is quite significant. They've actually increased the offsetting which will mean a lot more investment in agricultural offsetting projects, which is more in line with what the U.S. is doing. And the fact that households can do things to refuse offsets as well. Those are quite significant things that weren't in there before."

"It would seem to give further assistance to households, particularly in relation to electricity pricing and particularly in relation to allowing voluntary action."

BACKGROUND

- The government wants to set up a cap-and-trade system which is broadly similar to the European scheme in that it would rely on a marketplace to determine the cost of carbon emissions, though the Australian scheme is more broad in its scope.

- The government is committed to an unconditional emissions cut of 5 percent by 2020. This target could be increased to 25 percent if the world agrees to a tough new climate pact to replace the Kyoto Protocol in Copenhagen this December.

- The original scheme failed to pass the upper House of parliament earlier this year, giving Prime Minister Kevin Rudd a possible trigger to call a snap election on the issue if his carbon-trading legislation were to be defeated a second time.

- Rudd has now amended his carbon-trading legislation twice in order to meet the concerns of industry and win over enough opposition lawmakers to secure its passage.

- A second vote on the legislation is scheduled this week.

- Opposition lawmakers and heavy industries, including coal-fired power generators and miners, have lobbied hard for more compensation, arguing the government's proposals threatened to destroy jobs and force businesses to move offshore.

(Reporting by Australian bureaux)

((james.grubel@reuters.com; +612 6273 2730; Reuters Messaging: james.grubel.reuters.com@reuters.net))

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