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Australia CO2 scheme "weak, may be worthless"

SYDNEY (Reuters) - Australia’s planned emissions trading scheme might not be worth implementing without raising the upper limit of emissions cuts from 15 to 25 percent by 2020, the scheme’s architect said on Thursday.

The government’s top climate adviser, Ross Garnaut, expressed doubts during a parliamentary inquiry into the planned scheme.

“If there were no changes at all it would be a lineball call whether it was better to push ahead or...have another crack at it and do a better one when the time is right,” Garnaut said.

The scheme, which targets cuts of between 5-15 percent of 2000 levels by 2020, has come under criticism from green groups for being too soft and by business groups for being too tough.

Australia’s scheme would be the world’s broadest, covering 75 percent of emissions. Around 1,000 of the largest polluters, from transport operators and aluminum makers to gas producers and refineries, will have to pay to pollute.

Australia’s Labor government wants to have emission trading laws passed by parliament this year for the scheme to start by July 2010. But the scheme faces sweeping revision and possible delays after opposing Senate lawmakers joined forces to agree on an intensive two-month parliamentary review.

“The government will have to make serious changes to the legislation if it actually wants it to pass,” Senator Christine Milne, deputy leader of the Australian Greens, said on Thursday.

The 2020 emission targets of 5-15 per cent below 2000 levels were much too weak to fairly contribute to the global task of preventing dangerous climate change, she said.

Milne said there was little incentive for industry to cut emissions as the scheme gave too much compensation to business and lacked restrictions on the purchase of foreign permits.

Garnaut also called for limits on free permits and more funding for green technology.

COMPROMISE

The Australian emissions trade scheme will see a large portion of its carbon credits auctioned, unlike EU emissions allowances which are given out free. The aim is to push companies to pollute less or face ever-rising permit costs.

“There are some things that could be done that may reduce the compromise in the ETS to an extent that would make it worthwhile,” Garnaut said.

He said he was worried the emissions trading scheme gives too many free permits to industry and wanted an “escape clause” which would make it easier to stop their allocation.

Greens politicians also want tougher targets, while conservative opposition parties want the scheme delayed until 2012 to soften the blow for businesses that will shoulder higher costs.

The government needs the support of the opposition, or the five Greens and two independents, to pass the carbon trade laws in the Senate.

It has said it wants the carbon trading laws passed before a U.N.-backed meeting in the Danish capital, Copenhagen, in December that will bring together nearly 190 nations to try to seal broader climate pact to replace or update the Kyoto Protocol.

It has also said it will back a 15 percent cut if other rich nations commit to similar cuts at Copenhagen.

Australia, the world’s biggest coal exporter and a growing supplier of LNG, accounts for 1.5 percent of global carbon emissions but is one of the highest per-capita polluters, with 80 percent of electricity from coal-fired power stations.

Australia’s major exporting polluters, including iron ore and aluminum producers BHP Billiton, Alcoa and Rio Tinto, and LNG producers Chevron and Woodside Petroleum, will get significant exemptions for their emissions.

Reporting by Michael Perry; Editing by Rob Taylor and David Fogarty

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