By James Grubel
CANBERRA (Reuters) - Australia's planned carbon trading scheme faces sweeping revision and possible legislative delays after opposing upper house Senate lawmakers joined forces on Tuesday to agree on an intensive two-month review.
Draft laws on the proposed emissions trading scheme (ETS) will be released later on Tuesday and the government wants them passed by the end of June, a year before the July 2010 start for carbon trading.
But the conservative opposition parties and the Greens say they will push for Senate changes to the scheme, with the Greens wanting deeper emissions cuts and the opposition parties wanting the scheme delayed and more compensation for big business.
"This scheme, in its current form, cannot get through," Opposition spokesman Andrew Robb told reporters.
Industry insiders told Reuters the review and expected horse-trading as the government tries to get the legislation passed means there is now huge uncertainty over the final shape of the scheme.
"It's a tough one to get a view on, given the uncertainty," said an energy trader. "It may be hard to find people who are brave enough to form a strong view on it given the variables that can influence it getting passed."
In its current form, Australia's scheme will be the world's broadest, covering 75 percent of emissions. Around 1,000 of the largest polluters, from transport operators and aluminum makers to gas producers and refineries, will have to pay to pollute.
Australia's center-left Labor government needs the support of the opposition, or the five Greens and two independents, to pass its ETS laws through the Senate, but both the Greens and opposition are determined to force amendments to the plan.
The new Senate inquiry into the scheme will report back in June, but Climate Change Minister Penny Wong said the looming Senate battle could mean the government might not meet its July deadline to have the laws in place.
WRONG NUMBER
Greens Senator Christine Milne said the government would need to strengthen its target to cut greenhouse emissions by 5 percent by 2020 from 2000 levels.
"We know that the wrong number is five, and that it has to be changed," Milne told reporters. The Greens want at least a 25 percent cut in emissions. The government has said it will back a 15 percent cut if other rich nations commit to similar cuts at U.N. climate talks at the end of the year.
The Senate inquiry would look at green jobs and transformation of the A$1 trillion ($632.9 billion) energy-reliant economy, as well as renewable energy, she said.
Australia, the world's biggest coal exporter and a growing supplier of LNG, accounts for 1.5 percent of global carbon emissions but is one of the highest per-capita polluters, with 80 percent of electricity from coal-fired power stations.
Milne said the committee would report in time for the Senate's scheduled June consideration, but debate on the measures could stretch beyond that date, with conservatives controlling the largest bloc of upper house votes.
Wong has come under mounting business and political pressure as conservative MPs want the scheme's start delayed until 2011 or 2012, when Australia's economy might be recovering from the global financial crisis.
They argue that more free emissions permits should be granted to major polluters by the government to ensure a soft start to the scheme amid the current global financial tumult.
New Zealand's center-right National Party government last November suspended the planned carbon trading scheme of the former Labour government, which had been due to be phased in from this year. It had criticized Labor's cap-and-trade scheme as going too far too fast, imposing heavy costs on business and consumers, and being out of step with many of the country's main trading partners such as Australia.
Shortly after winning last November's election the National-led government set up a committee to review the options for an emissions trading scheme, and the government is now aiming to have a scheme operating from 2010.
($1 = A$1.58)
(Additional reporting by Rob Taylor; Editing by Michael Perry and David Fogarty)
