Carbon allocation debate

A report released by the Australian Conservation Foundation (ACF) has found that the Federal Government may give $3 billion worth of free carbon pollution permits to some of Australia’s largest companies as part of its carbon trading scheme to begin in 2010.

A report released by the Australian Conservation Foundation has found that the Federal Government may give $3 billion worth of free carbon pollution permits to some of Australia’s largest companies as part of its emissions trading scheme to begin in 2010.

The report found that amongst the major recipients will be Rio Tinto, who will receive an estimated $489 million and BHP Billiton, who will be given $340 million in permits.

The price if carbon under the scheme will likely be set at $20 a tonne.

The Government promised to protect key mining industries that will face potential competition from overseas companies who will not have to face similar greenhouse reduction systems.

Mining companies see the permits as a crucial means to maintaining their position in the world commodities market.

“Free allocation of permits for emissions intense and trade exposed activities is absolutely essential to maintain the competiveness of existing minerals based projects and enable new investment and employment in regional Australia,” Rio Tinto Principal Advisor Media Relations Amanda Buckley told Australian Mining.

There are those, however, who believe the permits allow the larger polluters to sidestep the plan.

Australian Greens climate change spokesperson Senator Christine Milne said the Government should abandon the free permits.

“The Government should immediately commit to auctioning 100% of emissions permits,” Milne said.

“It would deliver the Government the cash it needs to invest in the renewable energy and energy efficiency solutions that will drive an equitable outcome.”

Despite such objections, Rio Tinto remains unconvinced the free permits will be adequate.

“Even with the proposed level of permit allocation there will be impacts on the competiveness and investment decision making,” Buckley said.

“They are not too generous while competitor countries are not taking comparable.”

Rio believes the Government’s green paper should integrate a more global stance, and wants the scheme itself subject to future evaluation.

“In our view the paper does not integrate the Government’s strategy for securing a global climate change agreement,” Buckley said.

“We feel that it is essential around 2015 the government assesses progress by competitor nations and if necessary exercise a scheme pause button.”

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