Australia FinMin says no delay in emissions trade

By Rob Taylor

CANBERRA, July 14 (Reuters) - Australia's government said on Monday it would not delay the 2010 kick-off of an emissions trade scheme expected to reshape the A$1 trillion ($971 billion) carbon-intensive economy, as farmers warned against "arbitrary" start dates.

"The longer we wait to take action on climate change, the sharper the adjustment to the economy will be when we are forced to act. The Australian economy simply can't afford to wait," Treasurer Wayne Swan wrote in the Herald Sun newspaper.

The centre-left government's Climate Change Minister Penny Wong unveils on Wednesday an options paper for how the Emissions Trading System, or ETS, could work in an economy reliant on coal for electricity and on billions of dollars in export revenues.

Wong is expected to include fuel to make the regime as broad as possible, curbing greenhouse gas output by the world's top per-head emitter. But her paper will not have any short or medium-term emissions targets, with those due later this year.

Instead, the paper will provide direction for an ETS that will be among the world's most comprehensive, with the government to offer payments to motorists and households compensating for the inevitable price rises the regime will place on top of inflation, already racing at 16-year highs.

Introduction of the scheme poses significant risks to Prime Minister Kevin Rudd's 6-month-old Labor government, potentially alienating the working voters who backed it after more than a decade of conservative rule marked by rising living costs.

An Australian Workers' Union report on Monday said a poorly designed emissions scheme could result in 15,000 job losses in the aluminium industry, driving it offshore.

Wong said at the weekend that only 1,000 of Australia's biggest polluters, including mining and power companies, transport firms and big manufacturers, would be required to buy permits to emit carbon emissions, blamed for global warming.

That would capture some of the country's biggest corporate names, including miners BHP Billiton Ltd (BHP.AX)(BLT.L), Xstrata (XTA.L) and Rio Tinto Ltd/Plc (RIO.L), power companies AGL Energy (AGK.AX) and Origin Energy (ORG.AX), and transport company Toll Holdings (TOL.AX).

The chief executive of Coca-Cola Amatil (CCL.AX), Terry Davis, told the Financial Review newspaper that tax incentives were needed under the regime to make investment in environment-friendly plant equipment more attractive.

The influential group representing farmers said agriculture would be included in the scheme proposed by Wong, but warned no workable way of measuring agricultural emissions had been found.

"Measuring, monitoring and verifying agricultural carbon emissions across 155,000 farms is simply not possible to do accurately. The government must be careful not to just pluck any date out of the air for agriculture's suggested coverage," National Farmers Federation President David Crombie said.

The government is expected to agree on a scheme by the end of the year, with laws introduced in parliament early next year.

A top adviser to Wong and Rudd called two weeks ago for a two-year phase-in of trading between 2010 and 2012.

Treasurer Swan said a properly designed ETS would lead to new jobs and expertise in "new clean industries we can export to the rest of the world".

"We'll start gradually adjusting the economy now," he said. "Climate change is one of the most important issues to face Australians in a generation. It's a crucial test of economic leadership that we cannot afford to fail." ($1=A$1.03) (Editing by Jerry Norton)