On May 4 2009, the Rudd Government announced the delay of the implementation of the Carbon Pollution Reduction Scheme (CPRS) by a year. It is now expected to commence on 1 July 2011.
Other changes to the scheme
Aside from the delay, a few key changes to the scheme have been introduced to support jobs and assist businesses in coping with the regime amidst difficult economic times.
Prices of permits
The prices of permits will be fixed in the first year (1 July 2011–30 June 2012) at $10. An unlimited number of permits will be issued during this period, but these will not be able to be banked for use in later years. Subsequent purchases by businesses covered by the scheme will be at the prevailing market price.
Emissions-intensive trade-exposed (EITE) industries
A Global Recession Buffer is now to be provided as part of the assistance package for EITE industries for the first five years of the scheme. EITE activities which are eligible for 90 per cent assistance will receive an additional five per cent free permits, resulting in about a 95 per cent rate of assistance in the first year of the scheme. Such activities which were eligible for 60 per cent assistance will receive an additional 10 per cent free permits, effectively giving them a 66 per cent rate of assistance in the first year. The rates of assistance will decrease at 1.3 per cent per annum in subsequent years.
In addition, the five-yearly EITE review, which forms part of the EITE assistance program, will need to consider a broader range of issues.
Climate Change Action Fund
A $200 million tranche of the Climate Change Action Fund will also provide funding to businesses to implement energy efficiency measures in 2009–10. The forms that funding will take include:
- A business information package which outlines how the CPRS will work and the impacts and opportunities ($20 million)
- Information in the form of Early Action Energy Efficiency Strategies for Business, including energy audits and capital investment ($100 million)
- Capital investment grants for businesses and community organisations ($80 million).
Australian Carbon Trust
The $75.8 million Australian Carbon Trust will be established to help Australians and businesses in achieving energy efficiency and carbon pollution reduction. Of this amount, $25.8 million is dedicated to an Energy Efficiency Savings Pledge Fund, which will establish a new website. Households or individuals will be able to calculate their energy use and purchase permits under the CPRS. The remaining $50 million will be used to encourage businesses to take a long-term view and place emphasis on energy efficiency through the Energy Efficiency Trust. The Trust will cover the upfront capital costs of implementing such measures, and also allows repayment arrangements that prevent business capital being tied up.
This will be developed in collaboration with the Carbon Trust in the United Kingdom.
Reforestation
Opportunities in reforestation have broadened, with the eligibility to voluntarily generate permits for carbon stored from 1 July 2010. This is to encourage carbon pollution reductions prior to the commencement of the scheme.
Changes to carbon-reduction targets
On a broader scale, the government has committed to reduce Australia’s carbon pollution by 25 per cent below 2000 levels by 2020, on the condition that the world agrees to ‘an ambitious global deal to stabilise levels of CO2 equivalent at 450 parts per million or lower’ by 2050. The White Paper targets of a 5–15 per cent decrease on 2000 levels by 2020 are still in place.
This article was written by John Taberner, Consultant, Sydney, Renee Garner, Solicitor and Rachel Wong, Graduate, Melbourne.
More information
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