Australian cap-and-trade plan comes under fire

Plans to curb greenhouse-gas emissions face political opposition.

Australian climate-change minister Penny Wong. Credit: B. BAKKARA/AP

The Australian government's proposed cap-and-trade scheme to regulate greenhouse gases, released in draft legislation last month, is facing mounting criticism from opposition politicians. Prime Minister Kevin Rudd, whose Labor party holds a slim majority in the House of Representatives and none in the Senate, is under pressure to alter the plan or risk defaulting on a promise to implement a system by 2010.

Opposition leader Malcolm Turnbull of the Liberal party has called the scheme "irresponsible", and says it will cost jobs in a time of economic crisis. Meanwhile, the left-leaning Greens party argues that the emissions-reduction target, of 5–15% below 2000 levels by 2020, is "worse than useless".

“The best chance of an agreement at Copenhagen is for as many countries as possible to act. ”

Australia produces less than 2% of the world's greenhouse gases, but its per-capita emissions are among the highest in the world and rising (see chart). Decisive action from Australia could help build momentum for international climate-change negotiations in Copenhagen this December, says Senator Penny Wong, Australia's minister for climate change and water, who spoke on 30 March in Washington DC at a talk hosted by the Pew Center on Global Climate Change, based in Arlington, Virginia. "The best chance of an agreement at Copenhagen is for as many countries as possible to act," she says. "Australia is one of those."

In November 2007, a wave of public concern about climate in drought-ridden Australia helped Rudd win office over incumbent John Howard. On 10 March 2009, his government released draft legislation of an emissions-trading scheme that would begin on 1 July 2010.

Under the proposal, the roughly 1,000 Australian companies that emit 25,000 or more tonnes of carbon dioxide per year or the equivalent in other greenhouse gases would be required to obtain permits to emit, which could be bought at government auctions or traded. The country's total emissions would be controlled by a cap intended to achieve reductions by 2020 of at least 5% — up to 15% if other nations agree to similar targets — with a long-term goal of a 60% reduction below 2000 levels by 2050.

Credit: SOURCE: UNFCCC NATIONAL GREENHOUSE GAS INVENTORY DATA FOR THE PERIOD 1990–2006

The plan also offers assistance to certain industries, which some opponents argue is too generous. As outlined in a government white paper released in December, emissions-intensive industries vulnerable to trade competition would get 60–90% free permits in the first year, and coal-fired power generators would receive an estimated Aus$3.9 billion (US$2.7 billion) in assistance over 5 years. Agriculture and deforestation, which account for about 27% of Australia's emissions, would not initially be included.

Two Senate committees are due to deliver reports reviewing the proposed scheme this month and next, and the government hopes to push the legislation through parliament by June. For the bill to pass, Rudd will need support from the Coalition, made up of the Liberal and National parties, or the Greens, says Andrew Macintosh, associate director of the Australian National University's Centre for Climate Law and Policy in Canberra. Although some industry representatives have opposed the bill, he says, others "recognize that this is still a very good deal" and could pressure the Liberals to accept it.

But the possibility of delays has raised concerns that companies will be rushed into auctions if the bill passes with a July 2010 timetable, says Brian Fisher, chief executive of consulting firm Concept Economics in Canberra, who worked on climate policy for the Howard administration. "Everybody's now panicking that they won't have time to see how this thing will work before they're forced to buy their first permits," he says. The government should set an initial low ceiling on permit prices to test the system and protect export industries, he says.

Turnbull has argued that Australia should not finalize a scheme until after the negotiations at Copenhagen and after the United States reveals its plans. The latter came a step closer this week, as the US House of Representatives energy and commerce committee was set to release a draft cap-and-trade bill as Nature went to press. And on 20 March, the US Environmental Protection Agency submitted a proposed finding to the White House, widely thought to state that the greenhouse gases are pollutants endangering the public's health. Australia's experiences wrestling with cap-and-trade design issues could provide useful lessons for the United States as it formulates its own system, says Eileen Claussen, president of the Pew Center on Global Climate Change.

In Australia, the recent heat wave, wildfires and floods point to a need for urgent action, says Chris Cocklin, a sustainability policy expert at James Cook University in Townsville. "Every year we wait," he says, "it's just too damn long."

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Kwok, R. Australian cap-and-trade plan comes under fire. Nature 458, 554–555 (2009). https://doi.org/10.1038/458554b

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