The Abbott government has rejected suggestions it could be forced to pay companies more than $2 billion if it presses ahead with scrapping the carbon price before 2015.
New analysis from energy advisory firm RepuTex warns the government could be facing a $2 billion bill if companies rush to cash in their freely allocated permits before the carbon price is repealed.
Brown coal generators and other high-emitting companies were given free permits to help them get used to carbon pricing, which they could use to pay for their emissions or sell back to the government.
But without a carbon liability to pay, and millions of free permits up their sleeve, RepuTex claims these industries could be set for a “significant windfall” when the carbon tax is ditched.
If the scheme is abolished in October 2014, RepuTex forecasts the government could be left with a bill in excess of $2 billion as companies cash in nearly 87 million free carbon dioxide permits.
But if the repeal was delayed until April 2015, when companies would need their permits to pay for their carbon liability, the damage would be considerably less at around $138 million.
Finance Minister Mathias Cormann said he didn’t accept the modelling, adding the new government’s timeline for repealing the carbon tax remained unchanged.
“Our intention is to scrap the carbon tax with effect from 1 July 2014,” he told Sky News on Thursday.
It’s less than certain how the government will achieve its aim, given the hostile make-up of the Senate until June 30.
RepuTex claims the earliest the carbon tax is likely to be disbanded is the start of October 2014, assuming a deal has been struck with the new Senate.
