Update on the Carbon Pollution Reduction Scheme

On Sunday, 18October, the Coalition held a party-room meeting to finalise their position on the Carbon Pollution Reduction Scheme (CPRS).   The outcome of the meeting was that the Leader of the Opposition, Malcolm Turnbull, secured support to negotiate amendments to the Government’s proposed emissions trading scheme.

While permission to negotiate was unanimous, it has been widely reported that a number of Coalition members would defy any agreement reached with the Government, regardless of how many amendments the Government accepts, and will vote against any scheme before the Copenhagen climate change conference in December.

The Coalition’s proposals were outlined in a media release from the Leader of the Opposition (available at http://www.liberal.org.au/news.php?Id=3975 ) on 18 October 2009.

Key amendments

Trade Exposed Industries

  • Amend the CPRS to provide a single level of assistance for emissions intensive trade exposed (EITE) industries at 94.5 per cent until 2015 and 90 per cent thereafter.
  • Lower the threshold for assistance from the CPRS proposal of 1000 tonnes of CO2 per $1 million of revenue to 850 tonnes of CO2 per $1 million.
  • Continue to provide assistance to Australian EITE industries at 90 per cent until 80 per cent of their international competitors have also implemented carbon abatement measures.
  • Include primary food processing such as dairy and meat in the EITE scheme.
  • Allow industries that include a series of sequential or parallel production processes to have these assessed as a single activity in determining assistance.

Agriculture

  • Permanently exclude agricultural emissions from the CPRS.
  • Obtain Government agreement to introduction of an agricultural offset scheme in line with similar offset schemes to be introduced in comparable economies such as the US and EU.

Coal Mine Emissions

  • Exclude coal mine fugitive emissions from the CPRS.
  • Provide the Minister with authority to use regulation to control fugitive emissions with the objective of achieving a 30 per cent reduction by 2025 as technology and international best practice allow.

Lower Electricity Prices

  • The Coalition will continue to advocate an intensity-based cap-and-trade model for generators, which, they argue, will deliver the same emissions cuts as the CPRS but with a much smaller increase in electricity prices.
  • The Coalition contends that this would greatly reduce the burden on small and mid-sized businesses, which they argue, receive no compensation for higher power bills under Labor’s proposals.
  • The Coalition argues that under the CPRS, retail electricity prices will rise by close to 20 per cent in the first two years.   Under an intensity approach, the Coalition believes retail electricity prices would rise by less than 5 per cent in the first two years.
  • If the Government does not consider the intensity model, the Coalition will negotiate for an alternative approach to cushion near-term electricity price increases for small businesses.

Compensation for Electricity Generators

  • The Coalition argues that coal-fired generators must be better compensated for loss of value they experience from the CPRS, to ensure security of electricity supply and enable them to transition to lower emission energy sources.
  • The Coalition notes that the CPRS offers coal-fired generators 130 million permits over five years worth $3.6 billion, but points out that three private sector analysts estimate their losses at $9–$11 billion.
  • The Coalition argues that assistance should be increased to 390 million permits over 15 years (or about $10 billion). Assistance should be allocated to all generators in proportion to the losses they suffer.
  • This represents the Coalition’s best estimate of appropriate generator compensation given the available data.

Energy Efficiency and Voluntary Action

  • The Coalition will negotiate for a national “white certificate” energy efficiency scheme so households and businesses earn credits for efficiency measures, and contribute to reducing national emissions.
  • Likewise, the Coalition supports the creation of a voluntary offset market in advance of the introduction of the CPRS, and amending the CPRS to ensure voluntary abatement leads to a lower national level of emissions.

The Minister for Climate Change, Senator Penny Wong, said in response to yesterday’s developments that the Government welcomed the Coalition’s proposals and was looking forward to receiving the amendments and holding negotiations ‘in good faith’.  She indicated that she would meet with the Shadow Minister for Climate Change, Ian Macfarlane, today (Monday 19 October) to discuss the timetable for the legislation. The Minister confirmed the CPRS legislation will be introduced into the House of Representatives on Thursday 22 October.

“We’ll be introducing this legislation into the House on Thursday of this week. We propose to have it debated in the week thereafter and voted on in the week beginning November 16th and we’ll be debating it in the Senate thereafter.”

Senator Penny Wong, AM Radio, 19 October 2009

The final session of Parliament is from Monday 23 to Thursday 26 November, ten days before the Copenhagen Climate Change Conference from 7-8 December.

For further details about the CPRS see Hawker Britton’s Occasional Paper at https://www.hawkerbritton.com/wp-content/uploads/2017/03/climate-change-agenda.htm.