CANBERRA, Dec 15 (Reuters) - Australia unveiled long-awaited details of its plans for carbon trading on Monday, and its greenhouse emissions targets for 2020. Below are some questions and answers on the proposal. WHAT IS AUSTRALIA'S TARGET TO CUT EMISSIONS, AND IS IT ENOUGH? Australia has set a minimum target to cut emissions by five percent by 2020, based on year 2000 levels. But Australia will cut by up to 15 percent if international negotiations in Copenhagen in late 2009 agree on tough global action. The target has angered environment groups, who want cuts of at least 25 percent by 2020, and the Australian Greens, who want cuts of 40 percent by 2020 to fight global warming. The targets are also lower than the European Union, which has committed to cut by 20 percent of 1990 levels by 2020, and U.S. President-elect Barack Obama, who has foreshadowed cuts of 80 percent on 1990 levels by mid-century. But the Australian government argues its targets are compatible with Europe on a per-capita basis, and represent cuts of 27 to 34 percent on 2000 levels per-capita. HOW WILL CARBON TRADING WORK? Around 1,000 of Australia's biggest companies and 75 percent of greenhouse gas emissions will be covered by the scheme from July 1, 2010. In early 2010, the government will set an overall cap on total carbon emissions for the first five years. It will then issue permits to cover every tonne of carbon, which can be bought and sold. Companies are free to emit at whatever level they choose, but they must surrender one permit for every tonne of carbon they produce. The market will set the price of carbon permits, but the government will cap the price at a maximum A$40 ($27) a tonne, rising five percent a year above inflation for four years, to ensure price stability. HOW DOES THE GOVERNMENT WORK OUT ITS INDUSTRY ASSISTANCE? The government expects to raise A$11.5 billion ($7.7 billion) from auctioning carbon permits. All of that money will then be returned to help households and exporting industries adjust to the impact of carbon trading. The biggest polluting exporting companies will receive the most help. Firms that produce more than 2,000 tonnes of carbon for every A$1 million in revenue will receive 90 percent of their carbon permits for free. Companies that produce between 1,000 and 2,000 tonnes of carbon for every A$1 million in revenue will receive 60 percent of permits for free. The allocation of free permits is more generous than originally planned, and ensures oil and gas producers receive substantial assistance. WHO GETS FINANCIAL HELP? The government expects aluminium smelters, cement producers and iron and steel manufacturers could be entitled to receive 90 percent of their permits for free. The government says LNG producers, oil refiners and alumina refiners are likely to receive 60 percent of permits for free. The nation's coal-fired electricity industry is also set to get significant assistance, with A$3.9 billion set aside over five years to help the biggest polluting generators. Agriculture, which accounts for 16 percent of emissions, is also helped by being exempt from having to take part in trading until at least 2015. Householders will get financial help to help counter an expected one-off 1.1 percent increase in inflation, and higher prices for electricity and petrol. WHAT HAPPENS NEXT? The government will release draft legislation for carbon trading by the end of February, 2009, and will introduce the legislation into parliament in May. It hopes the laws will pass by June. But the government needs the support in the upper house Senate of either the conservative opposition, which wants the scheme delayed, or the Greens and two independent Senators. If the laws are sent to a Senate inquiry, it could be late 2009 before they pass into law. Climate Change Minister Penny Wong then heads to the global climate talks in Copenhagen in late 2009, where ministers will attempt to forge a global deal to replace the Kyoto Protocol agreement, whose first phase expires at the end of 2012. ($1 = A$1.49) (Reporting by James Grubel; Editing by David Fogarty)
