By James Grubel
CANBERRA (Reuters) - Australia's government released draft carbon trading laws on Tuesday, sticking to its timetable for a carbon market by mid-2010 and a 5 percent cut in emissions by 2020.
But Senate lawmakers say they will not support the carbon scheme without major changes, with Green politicians wanting tougher targets and conservative parties wanting the scheme delayed because of the global economic downturn.
Climate Change Minister Penny Wong, who released the package of six bills, said the government wanted the laws passed by the end of June. The legislation will go to parliament in May.
Wong said the government wanted the legislation passed ahead of December's Copenhagen meeting of environment ministers, who will try to seal a broader global framework to cut greenhouse gas emissions.
"The government is very mindful of the need to deliver business certainty and a clear position in the lead up to the Copenhagen climate change conference," she said.
Australia's center-left Labor government needs the support of the opposition, or the five Greens and two independents, to pass its carbon trade laws in the Senate, but both the Greens and opposition are determined to force amendments to the plan.
Opposing lawmakers in the Senate joined forces on Tuesday to set up a two-month inquiry into the scheme.
"This scheme, in its current form, cannot get through," Opposition spokesman Andrew Robb told reporters.
The government has set a target to cut emissions by at least 5 percent of 2000 levels by 2020, but the Greens want a stronger target, to cut emissions by around 25 percent by 2020.
The government has said it will back a 15 percent cut if other rich nations commit to similar cuts at Copenhagen.
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, 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.
LOW-POLLUTION FUTURE
"We're building a vehicle that will take us to a low-pollution future," Wong told a news conference.
"Some people want it to be a Ferrari, but if you can't have a Ferrari, would you really have no vehicle at all? I think that's the question that confronts Senators," she said.
The Australian emissions trade scheme will see the majority of its carbon credits auctioned, unlike EU emissions allowances which are given out free.
Australia's major exporting polluters, including iron ore and aluminum producers BHP Billiton, Alcoa and Rio Tinto, and liquefied natural gas (LNG) producers Chevron and Woodside Petroleum, will get significant exemptions for their emissions.
The Australian plan will allow the market to set the carbon price, which the government expects to be around A$25 a metric ton, with an initial cap of A$40 a metric ton, rising by five percent a year above inflation to ensure price stability.
But U.N. offsets called certified emissions reductions, or CERs, have fallen in price below this level, driven by a drop in demand because output from big compliance buyers has dropped due to recession.
The Australian scheme will allow unlimited imports of CERs to help firms meet their compliance needs.
To see latest over-the-counter price for carbon emissions, click on
($1 = A$1.58)
(Additional reporting by Rob Taylor; Editing by Michael Perry and David Fogarty)
