Media release - 4 May
2009 - The Carbon Pollution Reduction Scheme
will be phased in from 1 July 2011 and a
new, ambitious 25 per
cent by 2020 target has been put on the
table, as part of a package of new measures
announced today by the Rudd Government.
The package includes:
A delay in the start
date of the Carbon Pollution Reduction Scheme
of one year, to manage the impacts of the
global recession.
To further assist businesses during these
difficult economic times:
A one year fixed price period will be introduced.
Permits will cost $10 per tonne of carbon
in 2011-12, with the transition to full
market trading from 1 July 2012.
A new Global Recession
Buffer will be provided as part of the assistance
package for emissions intensive trade exposed
industries
Industries eligible for 60 per cent assistance
will receive a 10 per cent buffer, while
industries eligible for 90 per cent assistance
will receive a 5 per cent buffer.
Eligible businesses
will receive funding to undertake energy
efficiency measures from 1 July 2009.
A commitment to reduce
carbon pollution by 25 per cent of 2000
levels by 2020 if the world agrees to an
ambitious global deal to stabilise levels
of CO2 equivalent in the atmosphere at 450
parts per million or less by 2050.
If the world achieves
this ambitious agreement, Australia will
meet this 25 per cent target by harnessing
the CPRS, the expanded Renewable Energy
Target, and with substantial investment
in clean, renewable energy and energy efficiency
and strategic investment in carbon capture
and storage.
Up to five percentage
points of the 25 per cent target could be
achieved through Government purchase of
international credits, such as avoided deforestation
credits, using CPRS revenue no earlier than
2015.
Should the world achieve
this ambitious agreement, the Government
would seek a new election mandate for increased
2050 targets.
The establishment of
Australian Carbon Trust to allow households
to do their bit by investing directly in
reducing Australia’s emissions and to drive
energy efficiency in buildings.
In developing this package, the Government
has embraced the views of the Australian
community.
We have listened to
calls from the business community for a
later, more gradual start to the Carbon
Pollution Reduction Scheme and additional
assistance to help manage the impacts of
the global recession.
This new commitment
follows extensive consultation with environment
advocates on the best way to maximise Australia’s
contribution to an ambitious outcome in
international negotiations at Copenhagen
this December.
We have listened to
Australian households who have raised concerns
that their individual efforts to reduce
emissions had not been adequately taken
into account under the CPRS.
Together this package
of measures strengthens our response to
climate change, ensuring Australia plays
its part in global efforts to tackle climate
change while managing any impacts on our
economy.
We will also continue
to work with interested groups on an ongoing
basis to deal with other technical matters
as they arise.
The Carbon Pollution
Reduction Scheme legislation will be introduced
when Parliament resumes.
Passage of the Carbon
Pollution Reduction Scheme legislation this
year – including these new measures announced
today - is squarely in Australia’s national
interest.
It delivers the investment
certainty business needs during these difficult
economic times.
And it enables us to
advocate for the global agreement we need
to protect future generations of Australians
from the most damaging impacts of climate
change.
+ More
Carbon Pollution Reduction
Scheme: support in managing the impact of
the global recession
Media release - 4 May
2009 - The Rudd Government will delay the
start of the Carbon Pollution Reduction
Scheme by one year to help Australian companies
manage the impacts of the global recession.
Australian businesses
are currently dealing with the worst global
recession since the great depression.
In this environment
the Government has decided to act to further
support jobs and assist businesses during
these difficult economic times:
A one year fixed price
phase will apply between 1 July 2011 and
30 June 2012. During the fixed price phase,
each carbon pollution permit will cost $10.
From 1 July 2012, businesses covered by
the scheme will need to purchase permits
at the prevailing market price.
A new Global Recession Buffer will be provided
as part of the assistance package for emissions-intensive
trade-exposed industries.
Eligible businesses will receive funding
to undertake energy efficiency measures
in 2009-10 as part of a $200 million tranche
of the Climate Change Action Fund.
CPRS start deferred
to 2011 and permit price fixed at $10 for
one year
To allow the Australian economy more time
to recover from the impacts of the global
recession, the CPRS will commence on 1 July
2011 with a one-year fixed price phase.
During the fixed-price
phase, an unlimited number of permits will
be issued to liable companies at a price
of $10 per tonne.
Fixed-price permits
from the first year will not be able to
be banked for use in later periods.
The expanded Renewable
Energy Target will be in place as planned
from 2010 to drive investment in Australia's
vast renewable energy resources.
To encourage carbon
pollution reductions before the scheme starts,
reforestation will be eligible to voluntarily
generate permits for carbon stored from
1 July 2010, creating economic opportunities
in regional Australia.
A price cap will apply
from commencement of the Carbon Pollution
Reduction Scheme, with the 5-year EITE review
to look at whether the price cap should
continue into the future.
A number of other changes
have been made to the EITE assistance program,
including to the terms of the five-yearly
EITE review (see Attachment A).
Global Recession Buffer
An additional Global Recession Buffer will
be provided for emissions-intensive trade-exposed
(EITE) industries for the first five years
of the Scheme.
This Buffer will provide
an additional 5 per cent free permits for
EITE activities eligible for 90 per cent
assistance, giving an effective rate of
assistance of almost 95 per cent to these
highly emissions-intensive trade-exposed
activities in the first year of the scheme.
The Buffer will provide
an additional 10 per cent free permits for
EITE activities eligible for 60 per cent
assistance, giving an effective rate of
assistance of 66 per cent to these moderately
emissions-intensive trade-exposed activities
in the first year of the scheme.
Rates of assistance
will decline at a rate of 1.3 per cent per
year, in line with the Carbon Productivity
Contribution set out in the White Paper.
Support through the
Climate Change Action Fund
The Government has allocated up to $200
million to the Climate Change Action Fund
in 2009-10 to support businesses and community
organisations that do not receive EITE assistance,
but do have significant energy costs, to
take action to reduce carbon pollution through
energy efficiency before the scheme starts.
The $200 million tranche
of the Climate Change Action Fund for 2009-10
will include:
$20 million for a business
information package to provide advice to
businesses on how the CPRS will work and
what impacts and opportunities may arise
up to $100 million for Early Action Energy
Efficiency Strategies for Business, including
energy audits and capital investment
$80 million for capital investment grants
for businesses and community organisations
Together, these measures will help businesses
cope with the global recession while making
a contribution to Australia's comprehensive
climate change response.
Attachment A
EITE Assistance Program
The CPRS legislation will include an 'aims'
clause which directly relates the EITE assistance
program to the impact of the scheme on the
international competitiveness of EITE activities.
When conducting their
five-yearly EITE reviews, the Expert Advisory
Committee will consider the following issues
(amending and building on the position in
the White Paper):
the review of eligibility
assessment for activities (e.g. taking into
account falls in commodity prices etc as
outlined in policy position 12.8 in the
White Paper);
whether modifications should be made to
the EITE assistance program on the basis
of whether it continues to be consistent
with the rationale for assistance or is
conferring windfall gains on entities conducting
activities;
the extent to which the Scheme has resulted
in an increase in the cost of electricity
and the extent of pass through to EITEs;
the extent to which EITE firms are making
progress towards world's best practice energy
and emissions efficiency for their industry
sector;
the future shape of the permit price cap,
recognising the need to balance the development
of market mechanisms and business certainty;
international developments, including the
extent to which Australia has entered international
agreements, tangible emissions abatement
commitments have been made by countries
which compete with EITE industries, and
major partners or competing countries have
introduced carbon constraints into their
own economies; and
whether broadly comparable carbon constraints
(whether imposed through an explicit carbon
price or by other regulatory measures) are
applying internationally, at either an industry
or economy-wide level, or an international
agreement involving Australia and all major
emitting economies is concluded, in which
case the Committee would make recommendations
to Government with regard to the withdrawal
of EITE assistance; this assessment will
draw on analysis by an independent expert
body (initially the Productivity Commission)
of quantitative measures of carbon prices
or shadow carbon prices in major economies.
Five years' notice will be provided for
any modifications to the EITE assistance
program, unless the modifications were required
for compliance with Australia's international
trade obligations.
The continuation of
the Global Recession Buffer beyond five
years will be reviewed in light of domestic
and international economic conditions and
other relevant factors.
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