Australia slashes emission penalties in new climate plan

130 companies liable for carbon pollution penalties under Direct Action Plan, which opens with A$1.55 billion budget

By Ed King

Australia’s new climate plan means fewer companies will have to slash their emissions, and places the burden of funding cuts on the government.

Draft proposals were released earlier today, outlining how the A$2.55 billion Emissions Reduction Fund (ERF) will help the country meet its goal of cutting carbon pollution 5% on 2000 levels by 2020.

The government says it needs to prevent the emission of 421 megatonnes of greenhouse gases by the end of the decade to hit this target, which it presented to the UN in 2012.

The new fund will pay businesses for emission reduction projects such as preventing the release of waste gases from mining and ‘significant’ energy efficiency measures.

In a statement environment minister Greg Hunt said the administration accepted the science of climate change, and was committed to a “cleaner environment while improving business competitiveness.”

While 300 polluting companies are currently liable for their emissions under Australia’s current carbon tax system, the new plans will reduce that to 130, covering around 52% of the country’s emissions.

But under what the government terms a ‘safeguard mechanism’, it appears unlikely heavy polluters will face any additional penalties unless they exceed their ‘absolute emissions’ from 2009–10 to 2013–14.

The ERF could come online as early as July 1, but could face trouble in Australia’s Senate, where the climate sceptic Palmer United party, which controls four swing votes, has threatened to block its progress.


Leading mining conglomerate Rio Tinto, who contributed to the government paper, backed the new proposals, but climate analysts remain unconvinced.

“The Emissions Reduction Fund is unlikely to be robust enough to achieve Australia’s commitment of a 5% reduction in emissions,” said Kobad Bhavnagri, head of Australia research at Bloomberg New Energy Finance in Sydney.

He added: “The government has pushed the hardest and most important question of how to stop emissions growing ever higher to next year.”

Erwin Jackson, Deputy CEO of the Climate Institute NGO, warned the current budget to cut emissions was far too low, suggesting it would need to be raised to $3-$5 billion every year by the 2020s to achieve credible emission reduction goals.

“Without a mechanism to ensure that major emitting companies do their bit in driving new clean technology investments, we risk our economy continuing to fall behind,” he said.

“The USA, China, the EU and other major economies are already implementing carbon pricing, regulations and renewable energy incentives and are in the process of developing plans for steep emission controls beyond 2020.”

As the paper admits, Australia has one of the most carbon intensive economies in the world, largely due to its reliance on black and brown coal for energy, and its large mining sector.

But the government says it has no immediate plans to radically alter its energy mix, or try and cut its production of fossil fuels.

“The ongoing development of Australia’s extensive coal and gas reserves will continue to be an important element of future growth prospects.”

Emissions Reduction Fund White Paper

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