May 4 (Reuters) - Australia’s centre-left government announced a one-year delay and major changes to its carbon trading plans on Monday, citing the global economic recession for the need to set back the start date until July 2011. Under the changes to the eagerly anticipated scheme, major polluting exporters will receive more free permits and the carbon price will be fixed at A$10 ($7.35) a tonne for the first 12 months of the scheme. The government also opened the door to a tougher 2020 emissions reductions target.
Australia plans to auction carbon permits to 1,000 of Australia’s biggest firms, covering 75 percent of emissions.
Following is a list of changes announced by Prime Minister Kevin Rudd and Climate Change Minister Penny Wong on Monday.
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The carbon trading scheme will now start on July 1, 2011, instead of the original start date of July 1, 2010. Rudd said the 12 month delay would help business deal with the impact of the global recession. Rudd still wants the legislation for the scheme, which was initially expected to become law by mid-year, passed this year.
The government will fix the price of carbon at A$10 a tonne for the first 12 months of the scheme, with a transition to full market trading from July 1, 2012. The original scheme had capped the price at a maximum A$40 a tonne, but not fixed a price.
The government will lift its target for reducing emissions by the year 2020 to 25 percent, based on 2000 levels, if the world agrees to an ambitious global deal to curb emissions.
But the government will maintain its target for a minimum cut of 5 percent if there is no global agreement, or by 15 percent if major developed economies agreed to substantial cuts.
The original plan had set a target of 5 percent, with cuts of up to 15 percent if there was a global agreement to deep cuts. The Greens have called for a miniumum cut of 25 percent by 2020.
In the first year of the scheme, the government will increase the number of free permits for major polluting exporting industries, under what it labels a global recession buffer.
Industries originally eligible for 90 percent of free permits will now receive 95 percent of permits for free in the first year. Those industries are likely to include anluminium smelters, cement clinker producers, lime, silicon and iron and steel manufacturers.
To qualify for the top level of assistance, industries must produce 2,000 tonnes or more of carbon equivalent for every A$1 million in revenue.
Industries originally entitled to 60 percent assistance will receive an extra 10 percent of free permits in the first year of the scheme, giving an effective rate of assistance of 66 percent. Those industries are likely to include LNG and alumina industries, and petrol refiners.
To qualify for the 66 percent assistance rate, industries must produce between 1,000 and 1,9999 tones of carbon equivalent for every A$1 million in reenue.
Rates of assistance will decline at 1.3 percent ayear, inline with the original plan. ($1=A$1.36) (Reporting by James Grubel)