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Australia Faces Further Carbon-Scheme Delay

Date: 27-May-09
Country: AUSTRALIA
Author: Rob Taylor

CANBERRA - Plans for the world's most comprehensive carbon-trading scheme face defeat or parliamentary delay after Australia's opposition said on Tuesday it will try to postpone a vote on the laws this year.

The decision by the Liberal-National coalition during a party meeting adds uncertainty over the final shape and start date of the scheme. It also adds to the confusion on investment decisions for some big polluters trying to figure out future carbon costs.

Emissions trading is central to Prime Minister Kevin Rudd's promise to fight global warming, but his government has been unable to find seven extra votes it needs in the Senate, where conservative opponents hold the largest bloc.

The government has already put back the start of the scheme by a year to July 2011 and eased costs for business after months of criticism.

The conservatives said they wanted to delay a vote on the laws, already before parliament, until after December talks in Copenhagen on a global climate pact to succeed the Kyoto Protocol.

"Common-sense and prudence, the importance of getting this right, of pursuing a practical outcome that is effective for the environment and does not destroy jobs, demands that the decision on the scheme and the final design of the scheme should be postponed until after Copenhagen," Opposition Leader Malcolm Turnbull told reporters.

But delaying the vote till 2010 could mean the start date slipping further and raise the possibility of more design changes as a recession intensifies pressure on the government to ease the scheme's economic impact.

THREAT TO INVESTMENT

The scheme aims to cover 75 percent of the nation's emissions from 1,000 of the biggest polluters and will put a price on each tonne of carbon pollution. Using a cap on emissions, businesses will be progressively encouraged to cut pollution as carbon costs rise.

Rudd's leftist government has pledged to push the scheme through the Senate ahead of the Copenhagen talks. But if conservatives and minor parties twice reject the laws in the Senate, Rudd could call an early election.

As part of the concessions to opponents, particularly the Greens who have five Senate seats, the government has promised to cut greenhouse gas emissions by up to 25 percent on 2000 levels by 2020 if other rich nations agree on deep reductions as well.

Leading climate change analyst Rupert Posner said the likelihood of more delays to carbon trading was disappointing.

The country is the world's biggest coal exporter and a leading per-capita greenhouse polluter.

"What is pretty clear in Australia is that business knows that there will be a price on carbon," he said.

"If we just keep delaying it's going to make it impossible for anyone to undertake any major investment," said Posner, Director, Australia, for The Climate Group, an international NGO advising governments and business on how to reduce carbon emissions.

But the most important thing for international negotiations in Copenhagen would be what global deal Australia was prepared to strike, Posner said, and not whether the scheme had already passed parliament.

On that, Turnbull offered Rudd a concession, offering to support the government's target of a 25 percent maximum cut, giving Rudd and Climate Change Minister Penny Wong vital support for their negotiating stance in Copenhagen.

The Greens, who called on Monday for a quick Senate vote to defeat the carbon trade laws, said the government needed to focus on creation of green jobs and renewable energy investment.

Developing nations want rich nations to commit to deep 2020 emissions cuts at Copenhagen to prove their seriousness in the fight against climate change.

France and Germany suggested on Monday that rich nations collectively guarantee deep cuts of 25 to 40 percent below 1990 levels by 2020 while giving flexibility to other countries to catch up later.

(Editing by David Fogarty)

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