Wednesday, August 29, 2012

Carbon Shift to Ease Scrapping of Tax: Coalition


THE Coalition says the linking of Australia's carbon price to Europe's will make it easier for Tony Abbott to axe the scheme, by giving firms a market to resell unnecessary forward-dated permits. 
 
The opposition's acting climate change spokesman Simon Birmingham said Australian firms buying emissions permits in the European carbon market would not be left holding worthless paper when the Coalition abolished the Australian scheme.

“They will have a safe and clear way to offload those permits back into the European scheme,” Mr Birmingham said.

“We've always made it clear that it was possible to abolish the carbon tax and this further demonstrates there is absolutely no impediment to doing so.”

Labor yesterday moved assuage business fears about the impact of the carbon tax by dumping the scheme's controversial $15 a tonne floor price, a change that could slash hundreds of millions of dollars from annual company costs.

The scheme will be linked to the European carbon price from July 1, 2015, allowing Australian firms to buy and sell permits on the world's biggest carbon market.

But the move exposes the government to a potential multi-billion dollar budget hit, with emissions permits in Europe currently trading at about $8 a tonne - far below the $29 a tonne figure the government is relying on to reap a forecast $9.2 billion in revenue in 2015-16.

Australian Industry Group chief executive Innes Willox said linking the scheme to Europe was a good move.

But he said it was difficult to see the European carbon price getting up to $29.

“It's fanciful,” Mr Willox told Sky News, although he added: “This is a positive move in the long term.”

Mr Willox said there were a “whole lot of balls in the air” with the Coalition's policy.
“Business needs long term certainty ... the certainty of a regulatory framework,” he said.

Climate Change Minister Greg Combet said the EU carbon price had been hit hard by the eurozone financial crisis, but it would recover.

“It is three years away,” Mr Combet said. “The treasury modelling is something we stand by.”