The Rudd Government has released a green paper on emissions trading which sets out how the system will work and
The Rudd Government has released a green paper on emissions trading which sets out how the system will work and includes a measure aimed at reducing the cost of fuel on heavy vehicle operators.
The Government is supporting its climate change adviser, Ross Garnaut, by calling for “broad coverage” under emissions trading which includes transport.
Minister for Climate Change Penny Wong says the Government will deduct one cent from the fuel excise for every one cent rise in the price of fuel.
The measure is designed to soften the blow on the industry, which is suffering under skyrocketing fuel prices.
However, it may be a short-term initiative, with Wong saying it will be reviewed after one year for heavy vehicle operators and three years for other road users.
Wong released the Government’s proposed options for an emissions trading scheme during a speech to the National Press Club.
The Carbon Pollution Reduction Scheme will set a limit on the amount of carbon that can be emitted. Permits are auctioned off to the limit set by the Government, which will decide how many permits to issue.
Firms forced to be part of emissions trading will then need to compete to purchase the limited number of permits. According to the discussion paper, the market-based approach is the best way to slash emissions.
“Firms that value carbon permits most highly will be prepared to pay most for them, either at auction, or on a secondary trading market,” the paper says.
“For other firms it will be cheaper to reduce emissions than to buy permits.”
In its discussion paper, the Government proposes a business buy a permit for every tonne of greenhouse gas they emit. The emissions will be monitored and audited by the Government, which will penalise businesses if they pollute beyond their limit.
For instance, if the limit is set at 100 million tonnes of emissions a year, the Government will issue 100 million permits, the paper says.
At the end of the year, businesses will need to surrender a permit for every tonne of emissions produced during the year.
In outlining its proposal, the Government says it will not set any additional caps or limits on individual sectors.
However, the paper also says “certain categories of firms” may receive free permits to help them transition to a greener economy.
The paper does not list the proposed carbon threshold. The Government intends to release the figure in its policy paper to be released in December following the discussion phase.
It is estimated around 1,000 firms will need to take part in emissions trading while 99 percent of all firms will have some sort of indirect involvement in the scheme.
The Australian Trucking Association (ATA) is lobbying for the industry to have an indirect role by advocating upstream acquittal on fuel prices.