Australia's CPRS now delayed

The Australian federal government's Carbon Pollution Reduction Scheme (CPRS) was changed this month in response to pressure from businesses affected by the recession. It will now be delayed by one year to be phased in from July 2011. Other changes included: improved compensation for heavy polluters and trade-exposed industries; the price of carbon will now be fixed at $10, reduced from $20; and the rate of greenhouse gas reduction required will be 25% of 2000 levels by 2020, if the world agrees.

The package as detailed by the Prime Minister includes:

1. A delay in the start date of the Carbon Pollution Reduction Scheme of one year, to manage the impacts of the global recession.To further assist businesses: i. A one-year fixed price period will be introduced. Permits will cost $10 per tonne of carbon in 2011–12, with the transition to full market trading from 1 July 2012. ii. A new Global Recession Buffer will be provided as part of the assistance package for emissions-intensive trade-exposed industries. Industries eligible for 60% assistance will receive a 10% buffer, while industries eligible for 90% assistance will receive a 5% buffer. iii. Eligible businesses will receive funding to undertake energy-efficiency measures from 1 July 2009.
2. A commitment to reduce carbon pollution by 25% of 2000 levels by 2020 if the world agrees to an ambitious global deal to stabilise levels of CO₂ equivalent in the atmosphere at 450 parts per million or less by 2050. Up to five percentage points of the 25% target could be achieved through government purchase of international credits, such as avoided deforestation credits, using CPRS revenue no earlier than 2015.Should the world achieve this ambitious agreement, the government would seek a new election mandate for increased 2050 targets.
3. The establishment of Australian Carbon Trust will allow households to do their bit by investing directly in reducing Australia's emissions and to drive energy efficiency in buildings.

The new commitment follows extensive consultation with environment advocates on the best way to maximise Australia's contribution to an ambitious outcome in international negotiations at Copenhagen this December. The CPRS legislation is planned to go through this year in order to deliver more certainty to business. It will also enable the government to advocate for a global agreement.