Australia’s conservative Liberal-National government has rejected suggestions it could be forced to pay companies more than $2 billion if it presses ahead with scrapping the country’s carbon price before 2015.
New analysis from energy advisory firm RepuTex warns the government could be facing a $2 billion bill if companies rush to cash in their freely allocated permits before the carbon price is repealed.
AAP Newsagency reports brown coal generators and other high-emitting companies were given free permits to help them get used to carbon pricing.
They can either use the free permits to pay for their emissions or sell them back to the federal government at the fixed carbon price prevailing at the time, expected to be between $24.50 and $25 a permit..
However, without a carbon liability to pay, and millions of free permits up their sleeve, RepuTex claims these industries could be set for a “significant windfall” when the carbon price is repealed.
The Liberal-National government will need a compliant upper house Senate to get the repeal legislation passed and this is unlikely to eventuate until after July next year when eight new Senators take up their seats.
Until then the Senate will be under the control of the former Labor government and the Australian Greens Party, which jointly implemented the current carbon price legislation.
If the scheme was abolished in October 2014, RepuTex forecasts the government could be left with a bill in excess of $2 billion as companies cash in nearly 87 million free carbon dioxide permits.
However, if the repeal was delayed until April 2015, when companies would need their permits to pay for their carbon liability, the damage would be considerably less at around $138 million.
Liberal-National Finance Minister Mathias Cormann said he didn’t accept the modelling; adding the new government’s timeline for repealing the carbon price remained unchanged.
“Our intention is to scrap the carbon tax with effect from 1 July 2014,” he told Sky News earlier today.
It’s less than certain how the government will achieve its aim, given the hostile make-up of the Senate until June 30.
RepuTex claims the earliest the carbon price is likely to be disbanded is the start of October 2014, assuming a deal has been struck with the new Senate
