Australia should start with a “simpler and softer” emissions trading plan that is limited to fewer industries and eases the financial burden on polluters, a lawyer at Norton Rose LLP said.
The government’s previous cap-and-trade proposal to curb greenhouse gas emissions “didn’t have to be as complex as it was,” said Anthony Hobley, head of the firm’s climate change practice, who relocated to Sydney from London in May. “Australia was trying to introduce something much more comprehensive and much tougher than was initially introduced in Europe. There is logic in a simpler and softer beginning.”
Australia should restrict the plan initially to industries such as electricity generation and exclude others like agriculture, he said. The country should begin by distributing a higher level of free permits to polluters, while keeping a cap on carbon emissions, before a gradual transition to selling more, he said in an interview today.
Prime Minister Julia Gillard promised to restart efforts to tackle climate change when she replaced Kevin Rudd in June. Gillard said earlier this month that she would set up a committee to move toward the introduction of a carbon price as part of an agreement with the Greens Party. The Greens received a surge in voter support in Australia’s August election after the ruling Labor Party deferred its carbon pollution reduction plan until after 2012.
The climate-change discussion in Australia has reached a point at which many businesses see a carbon price as inevitable, Hobley said. The same move toward acceptance played out in Europe before emissions trading was introduced there, he said.
‘Too Ambitious’
“Knowing something will happen, but not knowing how or what or when is making investment decisions impossible at the moment,” Hobley said by phone.
More than 30 nations already have introduced a price on carbon with an emissions trading plan, he said.
BHP Billiton Ltd. Chief Executive Officer Marius Kloppers on Sept. 15 called on Australia to combine a carbon tax and regulation with a market-based trading system potentially restricted to power generation. The country must move away from coal as fuel, he said. “Failure to do so will place us at a competitive disadvantage in a future where carbon is priced globally,” he said.
Coal is burned for more than 80 percent of Australia’s electric power production, according to the Australian Coal Association.
AGL Energy Ltd. Chief Executive Officer Michael Fraser said last week that in Australia “perhaps we have been too ambitious in trying to introduce an all-encompassing CPRS.”
Under a cap-and-trade system, the government sets a ceiling on emissions and requires power plants, factories and other polluters to acquire enough permits to cover the carbon dioxide they release into the environment. Businesses that emit less than their allowance can sell surplus permits.
