Australia’s conservative Liberal-National government has released the formal design of its controversial multi-billion-dollar Direct Action climate change policy, and says it is writing to key Senate crossbenchers in the hope it will quickly pass parliament.
Liberal-National Environment Minister Greg Hunt unveiled the white paper on the central component of Direct Action, the Emissions Reduction Fund (ERF).
Mr Hunt also revealed an extra $1 billion would be allocated to the fund in the May budget, in keeping with the initial policy costing released in the 2010 election campaign.
He says the ERF would buy the lowest-cost carbon abatement schemes to reduce emissions through reverse auctions.
As such he said it would encourage “practical ways of reducing emissions where every dollar is spent on actually purchasing real means of decreasing Australia’s overall emissions”.
“I want to re-affirm today the Government’s clear, strong support for the science underpinning climate change, recognition of the need for both domestic and global action, and our commitment to the 5 per cent target as we go forward,” Mr Hunt said.
“All the signs are we will not just achieve our targets but do it easily, on the basis of early indications in the community.”
The ERF is slated to begin on July 1 with a budget of $300 million, growing to $500 million and then $750 million over three years.
The government said another $1 billion would be allocated in the May budget “with further funding to be considered in future budgets”.
“There are no surprises there. That is what we said four years ago, and that is what we are delivering now,” Mr Hunt said.
“That is a very big vote of confidence for business.
“It’s a way of ensuring in a difficult budget time that we are delivering what we said four years ago, and three years ago, and two years ago, and a year ago.”
Auctions for business to win the carbon abatement funding will begin late this year and will be conducted every three months.
Mr Hunt says the ERF will focus on “practical actions such as cleaning up waste coal mine gas, cleaning up wasteland fill gas, cleaning up methane, energy efficiency on a significant scale, whether it’s industrial, commercial or residential”.
However, he said the price per tonne of abatement was market sensitive and would depend on the auction process.
The ERF will also have a “safeguard mechanism” to discourage businesses from emitting higher than historical levels.
Mr Hunt said it would apply from July 2015 to approximately 130 firms or facilities that emit more than 100,000 tonnes a year.
However any penalties for a significant rise in emissions are yet to be set.
“We’re using the time between now and then to establish and agree with business the parameters,” he said.
“The preferred model, which we’ve set out, is to look at their long-term emissions and to look at potentially the highest point in the last five years, and if they start to, if they breach that, then that may then be the cause for discussion or activity, but I’m not setting out a compliance mechanism today.”
The government is facing legislative hurdles to introducing the scheme.
Its bid to repeal the carbon price has already been rejected by the opposition Labor Party and the Australian Greens Party in the Senate, and both parties have strongly rejected the Direct Action plan.
Earlier this week mining billionaire and federal MP Clive Palmer, whose Palmer United Party (PUP) senators will hold crucial balance of power seats after July 1, criticised the policy and threatened to reconsider his support for repealing the carbon price laws and the mining tax.
Mr Hunt said the Government would push ahead on both fronts, releasing exposure legislation in the next few weeks and then introducing the laws to parliament in the budget sittings.
“We are committed and we will not stop until we repeal the carbon tax, and we are committed and we will not stop until we’ve implemented the Emissions Reduction Fund,” he said.
“We’ll be writing now to all of the crossbenchers offering to meet and to discuss the carbon tax repeal and the white paper with them.”
Mr Palmer said his party would “methodically” look at the legislation when it was released.
