Yesterday, the Coalition called for a range of changes to the government’s proposed CPRS. These changes are set out in a brief outline1 released yesterday, and in press releases and speeches made then and subsequently, but details of the amending Bills that might be proposed are not yet available.
The Coalition has endorsed its leader, Malcolm Turnbull, and its emissions trading spokesman, Ian Macfarlane, to negotiate with the government in seeking these changes. However, their mandate does not extend to a final agreement with the government and, even if all of the changes were accepted by the government, a final approval from the Coalition party room will be required. A number of Coalition members, particularly the Nationals, have indicated that they would still vote against the CPRS even with the proposed changes.
Nevertheless, the Coalition’s step suggests that an agreement with the government on the CPRS is now more likely, either before or after the United Nations December 2009 Copenhagen Conference. The indications remain that some form of carbon pricing regime is inevitable in Australia.
Trade-exposed industries
- The Coalition proposes changes to the threshold for eligibility to the emissions intensive trade exposed (EITE) scheme. It wants the threshold lowered from 1,000 tonnes of CO2 per $1 million of revenue to 850 tonnes per $1 million.
- The Coalition proposes a single level of assistance for EITE industries at 94.5 per cent until 2015, falling to 90 per cent after that and continuing at that rate until 80 per cent of their international competitors have also implemented carbon abatement measures. The levels of assistance proposed by the government are: 94.5 per cent and 66 per cent (which would reduce to 90 per cent and 60 per cent by 2015).
- The Coalition also wants changes to the manner of calculation of assistance. It proposes to allow industries that include a series of sequential or parallel production processes to have these assessed as a single activity in determining assistance. This would significantly expand the number of industries qualifying for assistance and the total quantum of assistance.
- Also, the Coalition wants primary food processors, such as dairy and meat, included in the EITE scheme.
Agricultural emissions
- The Coalition wants the permanent exclusion of agriculture from the CPRS. In other words, the agricultural sector is not to be liable under the CPRS for its emissions. The government's proposal is to make a decision in 2013 as to whether the agricultural sector would be included and, if so, when (no earlier than 2015).
- The Coalition wants the introduction of an agricultural offset scheme.
Coal mine emissions
- The Coalition wants fugitive emissions from coal mines to be excluded from the CPRS. In other words, the coal mining sector is not to be liable under the CPRS for these emissions.
- The Coalition wants the introduction of regulatory scheme to control fugitive emissions with the objective of achieving a 30 per cent reduction by 2025 as technology and international best practice allow.
Emissions from coal-fired electricity generators
- The Coalition advocates an intensity-based cap-and-trade model for electricity generators as an alternative to the emissions-based cap-and-trade model which would apply to other sectors.
- The Coalition says that, if the government won’t consider the intensity model, the Coalition will ‘negotiate for an alternative approach to cushion near-term electricity price increases for small businesses’.
- The Coalition wants increased assistance to coal-fired power generators in the form of an increase in the number of freely allocated emissions permits. Assistance should be increased to 390 million permits over 15 years. Assistance should be allocated to all generators in proportion to the losses they suffer.
Energy efficiency
- The Coalition wants the introduction of a national ‘white certificate’ energy efficiency scheme, separate from the CPRS.
Voluntary action
- The Coalition states that it ‘supports creation of a voluntary offset market in advance of the introduction of the CPRS’ and wants to ‘amend the CPRS to ensure voluntary abatement leads to a lower national level of emissions’.
The emissions reduction target which the amendments are proposed to effect have not been clearly stated. Mr Macfarlane told a press conference yesterday that the Coalition ‘will stay on the target of five per cent reduction’.
He also told the press conference that the amendments were designed to be self-funding from revenue raised through the scheme.
Next steps
The government will be reintroducing the CPRS Bills into the House of Representatives on Thursday 22 October 2009 for debate in the week thereafter and for vote therein the week beginning 16 November 2009. This preserves the government’s ‘double dissolution trigger’. Debate will occur in the Senate after that.
This article was written by John Taberner, Partner, Sydney and Michael Voros, Senior Associate, Perth.
Endnotes
1. Liberal Party news article, ‘Coalition plan to save jobs and reduce costs’
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