12/12/2007 - 22:00

Business seeking viable emissions mechanism

12/12/2007 - 22:00

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With Australia set to introduce a national emissions trading scheme (NETS) by 2010, Western Australian businesses are urging the federal government not to rush the design of the scheme and risk disadvantaging the state’s economy.

Business seeking viable emissions mechanism

With Australia set to introduce a national emissions trading scheme (NETS) by 2010, Western Australian businesses are urging the federal government not to rush the design of the scheme and risk disadvantaging the state’s economy.

While the exact details of NETS haven’t been finalised, the scheme is expected to broadly follow the parameters set out by National Emissions Trading Taskforce, a group established by state and territory governments in 2004.

The scheme will most likely start with modest emission reduction targets to allow for a gradual transition for the economy, and will be followed by deeper emissions reductions over time.

The scheme would include a mix of auctioned and freely allocated permits, with some of the country’s most energy intensive and trade-exposed businesses allocated free permits to compensate for their disproportionate loss.

Rio Tinto Iron Ore chief executive Sam Walsh said he would look to play an active role in discussions to ensure that any greenhouse abatement measures rolled out by the government actually achieves significant results.

“Getting the mechanism right is a critical issue,” he told the forum. “It’s no good to us, or to anybody, if you have a scheme that is not going to operate effectively,” he said.

From Rio’s perspective, Mr Walsh said, an emissions trading scheme would be preferable to a carbon tax, with a global or regional trading scheme involving Australia’s major trading partners the best option.

Director of Energy and Minerals Initiative at UWA, Tim Shanahan, agreed that the issue should be looked at in a global context.

“If you look at the total gas emissions from Australia, the main gain for curtailing greenhouse gasses has got to be in the most energy intensive countries which at the moment are the US and China, with India coming up very quickly,” Mr Shanahan said.

But Mr Walsh said it was inevitable the world’s biggest emitters, including China, would become more active in pursuing growth within an environmental framework.

“We can say it’s not fair and it’s not a level playing field, and to an extent it’s not, but on the other hand I think its just going to become an imperative worldwide,” he told the forum.

“I can’t imagine that China and other developing countries can actually get away with saying, ‘well we’re developing therefore we’ve got to take a different approach on it’.

“When you physically go there and see the issues, you realise that this is a burning issue for them.”

WA Sustainable Energy Association chief executive Ray Wills said that Australia could learn from the European Union’s emissions trading scheme, where an over-allocation of permits caused the price of carbon to plunge.

“It was a failure of the design of the market though, not the actual market. The market worked exactly how it was supposed to; there was an oversupply of the stuff and it got cheap,” he said.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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