Australia’s Labor-led government plans to introduce a fixed carbon price from July 1, 2012 with a compensation scheme for some industries, the Australian newspaper reported on Saturday, a proposal its key coalition ally had earlier rejected.
Prime Minister Julia Gillard will next week propose a fixed price with a compensation system for energy-intensive industries such as electricity generation and trade-exposed industries. A transition to an emissions trading scheme will follow around 2015-2016, the paper said, citing sources close to the process.
The proposal, however, could face resistance from the influential Greens party, whose votes Gillard relies on to secure a majority. The party earlier rejected similar proposals because it gave too much compensation to the coal and power industries and the target was too low.
“Labor is set to demand some “real-world compromise” from the Greens by insisting that compensation for energy-intensive industries such as electricity generation and trade-exposed industries remain close to that offered in the deal former prime minister Kevin Rudd hammered out with then opposition leader Malcolm Turnbull in late 2009,” the newspaper said.
Former Prime Minister Kevin Rudd and the opposition leader had produced a plan for a carbon price while in office, but the plan was never implemented as both men were removed from the center stage of Australian politics.
Losing the Greens’ support could be a major blow to Gillard.
Her government depends on four independents and Greens to secure a majority in parliament and the conservative opposition under Tony Abbott opposes any carbon scheme. Polls show Gillard far behind Abbott so an early election could topple a Labor government.
An emissions reduction plan is becoming increasingly urgent for Gillard as government emissions projections released this week forecast Australia will produce 690 million metric tons of carbon dioxide equivalent by 2020. That represents a 24 percent increase in year 2000 emissions.
The government has pledged to cut emissions by at least five percent of year 2000 levels by 2020, but given the economy’s growth and reliance on polluting coal for power generation, a 5 percent cut means reducing emissions by 160 million metric tons by 2020.
Analysts and the government have said the longer it takes for a market price on carbon, the harder and costlier it will be to achieve the target.
The carbon and climate change debate further intensified this year after devastating floods swept through much of Queensland and Victoria states and one of the most powerful cyclones on record ravaged Queensland.
Fierce political and business opposition fearing higher fuel and power bills has already delayed plans for carbon pricing, with the government shelving a national emissions trading scheme after it was repeatedly rejected by parliament last year.
The government’s projections indicated that without new policies, emissions would grow 1.8 percent a year between 2010 and 2020, and well above the 0.4 percent growth a year over the past decade.
Australia is one of the world’s biggest per-capita emitters due to a reliance on coal for 80 percent of electricity generation.
In 2010, electricity accounted for 36 percent of emissions, agriculture and direct fuel combustion 15 percent each and transport 14 percent.
