Carbon Pollution Reduction Scheme
The government has committed to introducing a Carbon Pollution Reduction Scheme by 2011 as the primary mechanism for reducing greenhouse gas emissions.
On 15 December 2008 the Prime Minister, the Hon. Kevin Rudd MP, the Treasurer, the Hon. Wayne Swan MP, and the Minister for Climate Change and Water, Senator the Hon Penny Wong, released the government’s CPRS White Paper and the medium term target range for the Scheme.
The White Paper, entitled 'Carbon Pollution Reduction Scheme – Australia’s Low Pollution Future', sets out the government’s policy in relation to two major elements of its mitigation strategy: a medium term target range for national emissions, and the final design of the Carbon Pollution Reduction Scheme. These elements are placed in the context of Australia’s efforts to help shape a global solution, and a range of supporting and complementary climate change initiatives.
The White Paper follows from the Green Paper, released in July 2008, which canvassed options on the design on the scheme. It takes into account the outcomes of a broad consultation and input from more than one thousand submissions. The White Paper forms the basis of draft legislation which was introduced into Parliament on 14 May 2009.
Targets for reducing Australia’s carbon pollution
The Australian Government has a substantial commitment to reduce our carbon pollution by 60 per cent of 2000 levels by 2050.
The government has also committed to an unconditional 5 per cent reduction in carbon pollution below 2000 levels by 2020, which represents a significant cut of around 27 per cent on a per capita basis.
The government has committed to reduce Australia’s carbon pollution by 25 per cent below 2000 levels by 2020 if the world agrees to an ambitious global deal to stabilise levels of CO2 equivalent at 450 parts per million or lower by mid century.
In addition, the government retains its commitment to reduce Australia’s carbon pollution by up to 15 per cent below 2000 levels by 2020 in the context of a global agreement where major economies agree to substantially restrain carbon pollution and advanced economies take on reductions comparable to Australia.
On 4 May 2009, the government announced a package of new measures for the Carbon Pollution Reduction Scheme including a one year fixed price period. Permits will cost $10 per tonne of carbon in 2011-12, with the transition to full market trading from 1 July 2012.
A new Global Recession Buffer will also be provided as part of the assistance package for emissions intensive trade exposed industries. Industries eligible for 60 per cent assistance will receive a 10 per cent buffer, while industries eligible for 90 per cent assistance will receive a 5 per cent buffer.
Coverage of portfolio sectors
The Carbon Pollution Reduction Scheme will cover only domestic emissions sources and sinks that are counted in Australia’s Kyoto Protocol emissions account.
Agricultural emissions will be excluded from the CPRS. Agriculture can still play an important role in reducing our national emissions. The government is working with the agriculture industry to explore other policy options to ensure that emissions abatement opportunities in the agriculture sector are realised and to develop reliable and cost-effective methods of emissions estimation and reporting.
The government also does not consider it practical to cover emissions from deforestation. Australia's deforestation emissions have reduced markedly since 1990, largely due to government restrictions on land clearing.
The government proposes to include emissions from transport and energy in the scheme. To allow rural industries time to adjust to the scheme, the government will rebate the effect of the carbon pollution scheme on fuel costs for businesses in the agricultural, fishing and forestry industries for three years.
Offsets
The government proposes to include forestry on a voluntary or ‘opt-in’ basis from 2010. A voluntary approach is possible for forestry because, unlike other sectors of the economy, forests are likely to store more carbon than they emit. Forest landholders therefore have an incentive to voluntarily include their forests in the scheme.
Agricultural industries will be eligible to generate CPRS permits for abatement from sources that are counted towards Australia's international commitments. This will be subject to the development of robust methodologies. Eligible sources for abatement include:
- livestock
- manure management
- fertiliser use
- burning of savannas
- burning of agricultural residues
- rice cultivation
- avoided deforestation
- legacy waste
- emissions from closed landfill facilities.
In addition, the Government will promote voluntary market offsets through the implementation of the National Carbon Offset Standard. This will provide scope for a market for abatement from the following sources that are not counted towards Australia's international commitments:
- agricultural soils (grazing and crop land management), including biosequestration through soil carbon and biochar
- enhanced forest management, and
- non-forest revegetation and vegetation management.
Abatement from these sources will transition into the CPRS once abatement is internationally recognised within our national accounts and provided that other CPRS requirements are met.
Further information is located on the Department of Climate Change website.