CANBERRA (Reuters) - Australia’s move to postpone its emissions trading plan could force the government back to the drawing board on climate policy and revive the push for a straight carbon tax to help curb emissions.
Prime Minister Kevin Rudd has postponed his centrepiece carbon trade plan until at least 2013, and said the government would assess its options in late 2012 when other countries would be clarifying post-Kyoto agreements to curb emissions.
“I think it is all back on the table,” prominent Australian National University economics professor and central bank board member Warwick McKibbin told Reuters on Wednesday. “Industry must be very frustrated. This is the worst possible outcome for them.”
The decision adds to business uncertainty and could lead to job losses in banks and big companies which had been preparing to trade carbon permits ahead of the planned July 2011 start, and within the government’s Climate Change Department.
The government’s Carbon Pollution Reduction Scheme (CPRS) had planned to force 1,000 of the country’s biggest polluters to buy permits for every tonne of carbon produced.
But laws for the scheme had been defeated twice by parliament’s upper house Senate, with no sign the legislation would pass before national elections, due any time from July.
The delay is a reprieve for major power generators such as AGL Energy, the Australian arm of International Power and Alinta Energy, steelmakers BlueScope Steel and OneSteel, and resource companies such as Woodside Petroleum, Rio Tinto and BHP Billiton.
McKibbin has promoted a hybrid carbon trade scheme, with fixed-priced annual carbon permits similar to a carbon tax, with longer-term permits that could be traded. A central body, modeled on the central bank, would oversee permit supply.
“There are a number of different ways to create emissions trading schemes,” he said. “The CPRS was one particular form, and not a very good one. There are other options out there that would not be too difficult to move into, given what has been prepared.”
The Greens have also called on Rudd to reconsider their plan for an interim levy on big polluters until full carbon trading can start, but with strong emissions targets.
Rudd on Wednesday said the government was still broadly committed to its plan, and would keep its target to curb greenhouse emissions by 5 percent of 2000 levels by 2020.
“The government’s commitment to greenhouse gas reduction targets remains unchanged. The government’s commitment to a Carbon Pollution Reduction Scheme to do that remains unchanged. What has changed is the pathway to get there,” he said. The government also stood by its 20 percent target for renewable energy by 2020, ensuring an ongoing market for renewable energy certificates.
Envex, a Macquarie Group-backed firm that had hoped to be among the first to provide a carbon trade platform, said carbon trading would now be likely between 2013 and 2014.
“I think most people will be of the view that there will be an emissions trading scheme at some point in the future and it makes sense to factor that in to their investment decisions,’ said Envex general manager Vincent Cornes.
However, some firms have already pulled out of Australia, frustrated at the lack of progress, including global brokerage firm Newedge.
The operator of Australia’s existing futures exchange, ASX Ltd, is taking a relaxed view.
“Really not much has changed for us as we’re ready with the futures contracts to support and service the CPRS once it gets passed,” said Anthony Collins, ASX’s general manager of emerging markets.
Additional reporting by Bruce Hextall in SYDNEY; Editing by Sugita Katyal
Our Standards: The Thomson Reuters Trust Principles.