Now is not the time

Delay essential for Federal Government's controversial emissions trading scheme.

THE global economic and financial crisis has greatly reduced the ability of manufacturers to invest in emissions-reduction technology and is an important factor behind Ai Group’s call for a two-year delay to the Federal Government’s emissions trading scheme.

Australian businesses are strapped for cash and with tightening credit markets, it’s difficult to see how extra liabilities and costs can be accommodated in newly revised business plans.

Nonetheless, despite these challenging business conditions, many firms have already started to introduce new processes, and new plant, equipment and training, to combat their greenhouse gas emissions.

Combined with the sharp downturn in the economy, along with the associated drop in emissions from reduced metals production and slower growth in energy demand, Australia is already on track to meet its Kyoto commitments over the period to 2012.

Today’s business owners accept that climate change poses a serious threat to our environment and our lifestyle, and that traditional industrial practices may have exacerbated the extent of the change.

As such, most agree that best practice requires Australia to adopt an economy-wide framework for reducing the country’s greenhouse gas emissions.

The question is how best to usher Australian industry into a low emissions future, while ensuring the new requirements do not cause unnecessary damage to the country’s corporate profits.

In this regard, Ai Group has major concerns about the Federal Government’s draft Carbon Pollution Reduction Scheme (CPRS) legislation released on March 10.

These include opposition to the Government’s renewable energy target of a 5% reduction in Australia’s 2000 emissions by the year 2020, and a request for greater support for the exploration and exploitation of a full range of low-cost abatement opportunities.

Our major concerns, however, are:

1. The start date for the scheme should be delayed until 2012.

The global crisis is detracting from the ability of businesses to undertake further expenditure, but it is also, ironically, removing the urgency from the need to introduce such measures because of the general reduction in energy use.

2. There are further changes that can be made to the detail of the scheme to reduce the potential impact on trade-exposed businesses, that is, those whose competitors operate in countries where carbon emissions are unregulated and who may therefore be at a severe competitive disadvantage.

To counter the negative effects on these companies, Ai Group has urged the Government to broaden eligibility for permits and raise the number of permits, among other measures.

Ai Group supports the desire of the Government to pass legislation governing greenhouse gas emissions during 2009.

We also support the market-based approach of the proposed emissions trading scheme, as it leaves the Government free to regulate the national cap on emissions while leaving the detail of emission reduction to market forces.

The fundamental framework of an emissions trading approach is sound.

But the Government needs to ensure viable legislation is in place to take to the Copenhagen talks on climate change scheduled for December.

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