NEWS - Climate Change

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Reuters

SINGAPORE – The coalition's scheme to cut carbon pollution will fail to meet its emissions targets and prove more costly than a programme backed by the government, research released on Tuesday shows.

Analysis by Bloomberg New Energy Finance found the government's planned Carbon Pollution Reduction Scheme will cost less than $1.5 billion over the first four years, not $40.6 billion as stated by the opposition.

"Indeed the CPRS would actually be more cost-effective than the Coalition's proposed climate policy, which would cost some $3.2 billion over the same period," the analysis said.

The Senate twice rejected the government's carbon trade laws last year and an amended version of the scheme is now before parliament for a third time. It looks set for failure again unless a last-minute deal between rival parties can be reached.

That looks unlikely given the intensely polarised debate on climate policy in the country, with the opposition accusing the government trying to impose a huge new tax via emissions trading.

The CPRS would put a price on every tonne of carbon from about 1,000 of the country's largest greenhouse gas polluters, covering about 75 per cent of the nation's total annual carbon emissions. The scheme is supposed to start mid-2011.

Big emitters would have to surrender a permit for every tonne of carbon dioxide under the mandatory scheme that aims to cut emissions by at least 5 per cent by 2020 from 2000 levels.

The opposition's climate policy released this month also aims to cut emissions by 5 per cent by 2020 and hinge on a government emissions reduction fund to pay for measures that reduce emissions and lock away carbon.

"The coalition's claim that the CPRS will cost $40.6 billion appears to be based on a strange logic which confuses the value of allowances distributed with the actual cost of emissions reductions to the economy," said the analysis.

The report examined the opposition scheme according to cost-effectiveness, certainty and the ability to scale it up.

The authors found that the CPRS, because it would be linked to the international carbon market, would give companies more options in reducing their emissions. Being market-based backed with penalties, it also forced participants to find the least-cost options.

"In contrast the coalition's approach is a voluntary mechanism and so does not penalise firms whose emissions increase, and it does not offer a permanent price signal," the analysis said.

The Coalition's scheme was also unable to guarantee a specific level of emissions reduction.

Direct government funding would also become increasingly unviable because the cheapest projects used to cut emissions would soon be exhausted, leading to more significant investments to move to a lower-carbon economy.

"This will arguably be a 10-year policy at best," the analysis said of the opposition's scheme.

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