ETS is expensive and flawed, MCA

The Minerals Council of Australia has criticised the proposed Emissions Trading Scheme.

The Carbon Pollution Reduction Scheme is neither economically efficient nor environmentally effective and will not establish incentives for investment in low emissions technologies, the Minerals Council of Australia said in a report released yesterday.

The Senate Select Committee Inquiry into Climate Policy Report said the proposed Emissions Trading Scheme (ETS) is fundamentally flawed, and must be substantially revised.

“If the scheme is implemented in its proposed form, the competitiveness of the Australian economy will suffer, investment will stall, jobs will be lost and the overall environmental impact will be negligible, and possibly even negative,” the report said.

Research undertaken by the Council has shown the proposed ETS will impose net carbon costs on the Australian business sector of $14.5 billion in the first two years, and nearly $34 billion over the first four years.

“The proposed ETS is out of step with other international schemes and will impose the world’s highest carbon costs,” the report said.

“All other international ETS schemes are based on a model where virtually all permits are allocated without charge during the transitional phase.

“In contrast, the proposed Australian ETS will auction around 70% of total permits from the outset of the scheme.

“This means that most Australian firms will buy 100% of their permits from July 2010. In comparison, their EU competitors will not have to buy all their permits until 2027.

According to the report, it is not just the permit pricing that is causing controversy but the interim 2020 emission target as well.

The 5% reduction in emissions by 2020 represents a reduction of 250 million tonnes of CO2e off business as usual projections.

“This target is nearly equivalent to the emissions from Australia’s entire electricity and transport emissions which were 275 million tonnes in 2006,” the report said.

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