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Australia delays carbon-trade scheme amid recession


Latest update : 2009-05-04

According to media reports, the Australian government is contemplating delaying its ambitious carbon-trade scheme by one year. It would buy more time to win approval from industry and respond to accusations that it may hamper recovery.

Reuters - Australia will delay the start of its planned carbon-emissions trading scheme by a year to mid-2011, local media said on Monday, as industry opposition to the scheme intensifies and the nation slips into recession.

But the state broadcaster ABC said the government would also increase its interim 2020 emissions-reduction target, currently for a cut of 5-15 percent based on 2000 levels. The report did not give a proposed new target.

The delay would give Prime Minister Kevin Rudd, who has been under pressure from industry and opposition politicians to water down or even ditch the scheme, more time to win approval for what would be the world’s most sweeping cap-and-trade scheme outside of Europe. He declined immediate comment on the reports.

Major emissions industries, from aluminium-smelters to airlines, had complained about the planned July 1, 2010, launch date next year, saying it would hamper economic recovery and destroy jobs at a time when unemployment was rising fast.

A slower start but tougher reduction target might help the government push the carbon-trading laws through an obstructive upper house of parliament dominated by conservative opponents, five Green senators and two swing-vote independents.

The government could also lower the A$40 a tonne cap on the price of carbon and offer more support to emissions-intensive and trade-exposed industries like cement and aluminium, media reports said.

The centre-left government, which came to government in 2007 promising to reduce greenhouse gases, is due to hold a news conference around 1240 p.m. (0240 GMT) on Monday.

Conservatives have been calling for the scheme to be delayed and the influential Greens want tougher interim targets.

“I’m a little surprised but I suppose the good thing is at least it gets resolved... The worst outcome is continued uncertainty about what is going to happen,” said Gary Cox, vice president of commodities and energy at global brokers Newedge.

Industry welcomes delay

The Australian Chamber of Commerce and Industry (ACCI), representing business, last week told a Senate inquiry into carbon trade that the scheme should be delayed until financial turmoil had passed and the economy returned to trend growth.

“We will certainly welcome any changes,” said Greg Evans, director of industry policy for the ACCI, said on Monday.

“Clearly, the balance of interests warrants delay in the implementation of the operational elements of the...scheme in Australia,” Evans said.

The Australian Greens wrote to Rudd with an offer to break the political impasse in the Senate and support carbon-trading legislation if amendments  made it environmentally effective.

The Greens want Australia to make an unconditional emissions cut of 25 percent below 1990 levels by 2020, with a commitment to move to a 40 percent cut if world climate talks in Copenhagen in December forge a new global climate pact.

Rudd was considering extending the upper limit to 25 percent, political sources told Reuters. But in preparing changes, the government would still aim for laws setting up the scheme to pass parliament this year, but delaying its start until 2011.

($1=1.357 Australian Dollars)

Date created : 2009-05-04