May 4 2009
The Rudd Government in Australia will delay the start of the Carbon Pollution Reduction Scheme by one year to help Australian companies manage the impacts of the global recession.
Australian businesses are currently dealing with the worst global recession since the great depression.
In this environment the Government has decided to act to further support jobs and assist businesses during these difficult economic times:
- A one year fixed price phase will apply between 1 July 2011 and 30 June 2012. During the fixed price phase, each carbon pollution permit will cost $10. From 1 July 2012, businesses covered by the scheme will need to purchase permits at the prevailing market price.
- A new Global Recession Buffer will be provided as part of the assistance package for emissions-intensive trade-exposed industries.
- Eligible businesses will receive funding to undertake energy efficiency measures in 2009-10 as part of a $200 million tranche of the Climate Change Action Fund.
CPRS start deferred to 2011 and permit price fixed at $10 for one year
- To allow the Australian economy more time to recover from the impacts of the global recession, the CPRS will commence on 1 July 2011 with a one-year fixed price phase.
- During the fixed-price phase, an unlimited number of permits will be issued to liable companies at a price of $10 per tonne.
- Fixed-price permits from the first year will not be able to be banked for use in later periods.
- The expanded Renewable Energy Target will be in place as planned from 2010 to drive investment in Australia's vast renewable energy resources.
- To encourage carbon pollution reductions before the scheme starts, reforestation will be eligible to voluntarily generate permits for carbon stored from 1 July 2010, creating economic opportunities in regional Australia.
- A price cap will apply from commencement of the Carbon Pollution Reduction Scheme, with the 5-year EITE review to look at whether the price cap should continue into the future.
- A number of other changes have been made to the EITE assistance program, including to the terms of the five-yearly EITE review.
Global Recession Buffer
An additional Global Recession Buffer will be provided for emissions-intensive trade-exposed (EITE) industries for the first five years of the Scheme.
This Buffer will provide an additional 5 per cent free permits for EITE activities eligible for 90 per cent assistance, giving an effective rate of assistance of almost 95 per cent to these highly emissions-intensive trade-exposed activities in the first year of the scheme.
The Buffer will provide an additional 10 per cent free permits for EITE activities eligible for 60 per cent assistance, giving an effective rate of assistance of 66 per cent to these moderately emissions-intensive trade-exposed activities in the first year of the scheme.
Rates of assistance will decline at a rate of 1.3 per cent per year, in line with the Carbon Productivity Contribution set out in the White Paper.
Support through the Climate Change Action Fund
The Government has allocated up to $200 million to the Climate Change Action Fund in 2009-10 to support businesses and community organisations that do not receive EITE assistance, but do have significant energy costs, to take action to reduce carbon pollution through energy efficiency before the scheme starts.
The $200 million tranche of the Climate Change Action Fund for 2009-10 will include:
- $20 million for a business information package to provide advice to businesses on how the CPRS will work and what impacts and opportunities may arise
up to $100 million for Early Action Energy Efficiency Strategies for Business, including energy audits and capital investment
- $80 million for capital investment grants for businesses and community organisations
Together, these measures will help businesses cope with the global recession while making a contribution to Australia's comprehensive climate change response.