National and State Action on Climate

All Australian Commonwealth, State and Territory Governments have now committed to establishment of an Emission Trading Scheme.

In 2004 the State and Territory Governments established a National Emission Trading Taskforce (NETT) to examine the design of an Emission Trading Scheme (ETS).

These Governments in February 2007 committed to establishing an ETS subject to the following principles:

1. Commonwealth participation is essential
2. A very significant priority is the need to stimulate research and investment in renewable technologies, innovative carbon capture technology and clean coal technologies that maximise the economic benefits from Australia’s plentiful coal reserves
3. Permit auction revenues should be divided among States and Territories in a way that produces equitable outcomes
4. Energy-intensive, trade-exposed industries should be protected from the impact of the scheme while competing nations are not subject to commensurate emissions reduction policies
5. The scheme design addresses the issue of providing greater long term certainty for investors in energy and energy-intensive industries
6. The scheme must be implemented as part of a coherent package of measures, including those in sectors not initially covered by the trading scheme

On 3 June 2007, not long following receipt of a report from an Emissions Trading Taskforce, the Prime Minister announced that Australia will move towards a domestic emissions trading system, beginning no later than 2012. 

The announcement committed the Government to introducing a ‘cap and trade’ emissions trading scheme featuring a long-term aspirational emissions abatement goal and associated emission pathways to provide a context for Australia’s contribution to reducing emissions of greenhouse gases  

Features of the ETS recommended by the task force include:

• a system of permit allocation and issuance that:
  • provides an up-front, once-and-for-all, free allocation of permits as compensation to existing businesses identified as likely to suffer a disproportionate loss of value due to the introduction of a carbon price
  • ameliorates, through free allocation, the carbon-related exposures of existing and new investments in trade-exposed, emissions-intensive industries until key international competitors face similar carbon constraints, but which also provides ongoing incentives for abatement and adoption of industry best practice
  • provides abatement incentives in the lead up to the commencement of emissions trading, and ensures that early abatement actions do not disadvantage firms
  • allows for the periodic auctioning of the remaining permits
• a ‘safety valve’ emissions fee designed to limit unanticipated costs to the economy and to business, particularly in the early years of the scheme, while ensuring a continuing incentive to abate
• recognition of credible domestic and international carbon offsets
• capacity, over time, to link to other national and regional schemes in order to provide the building blocks of a truly global emissions trading scheme
• a mandatory emissions and energy reporting system purpose-built to support the potential needs of the Australian emissions trading scheme