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Australia set for soft carbon trade start: reports

05 Dec 2008 00:29:16 GMT
Source: Reuters

CANBERRA, Dec 5 (Reuters) - Australia's government will announce a soft start to carbon trading, cutting emissions by 5-10 percent in a move likely to anger environmentalists but soothe businesses fearing a downturn, reports said on Friday.

The centre-left government will unveil its plans for the carbon regime on Dec. 15 following divisions among senior cabinet ministers concerned about the impact a 2010 carbon trading start-up could have, as Australia fights now to avert recession.

Ministers, including Climate Change Minister Penny Wong and Treasurer Wayne Swan, were "settling on a target centred on a cut of 10 percent", the Sydney Morning Herald newspaper said on Friday, without saying where the information came from.

But to maintain flexibility in global negotiations on a successor to the Kyoto climate pact, the cut would be expressed as a 5-15 percent reduction range, the paper said.

"Should Australia be accused of wimping it, ministers point out...that a 10 percent cut to national carbon emissions by 2020 is equivalent to a cut of 27 percent per capita because of our expected population growth," Herald political columnist Peter Hartcher wrote.

The Australian national newspaper also said government would unveil a reduction of 5-15 percent in emissions below 2000 levels, opting for the low end of recommendations from its chief climate adviser amid concern about rising joblessness.

"After months of furious lobbying from key industries, including LNG, cement and steel, the government will offer significant changes to its original formula offering wider compensation to trade-exposed emissions-intensive industries," the newspaper said.

An interim framework in July proposed mandating 1,000 of Australia's biggest polluting companies buy permits to pollute. Carbon trading puts a market price on carbon emitted.

Big businesses have warned the government against setting tough interim cuts towards a 2050 reduction target of 60 percent, saying the costs could worsen the economic slowdown and jeopardise growth already tipped to halve to 2 percent or less.

But a group of 50 climate groups and scientists wrote to Prime Minister Kevin Rudd on Thursday to demand a cut of 25 to 40 percent to help avert dangerous climate shift.

To deflect resistance to its scheme in Australia's upper house Senate, where a disparate group of Greens and pro-Christian independents hold the balance of power, the government aims to win over conservative opponents holding the largest voting block.

The Herald said Rudd was elected, in part, on a climate-change platform and was "keenly mindful" he must meet his promise of carbon mitigation while deflecting accusations from rivals he was "sacrificing Australian jobs to a quixotic green dream".

Australia is the world's biggest coal exporter and relies on coal for 80 percent of domestic electricity generation.

A report by Australia's Treasury deemed the carbon trading regime would have only a minimal impact on the domestic economy, cutting average per-capita growth by 0.1 percent a year between 2010 and 2050. (Reporting by Rob Taylor; Editing by Mark Bendeich and Valerie Lee)

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