18 October 2009


Press release issued by the Hon. Malcom Turnbull MP following party room discussions on amendments to the Rudd Labor government's emissions trading scheme (ETS).

The Coalition has unveiled a plan to save thousands of Australian jobs and limit increases in electricity prices for small business through common sense amendments to Labor's flawed and rushed emissions trading scheme.

The Shadow Cabinet and Joint Party Room today agreed to a package of amendments that will form the basis for good faith negotiations with the Rudd Labor Government. The package demonstrates Labor's CPRS can be made cheaper and smarter, protecting jobs.

Key export industries, including coal mining, food processing, natural gas and aluminium will be better protected, saving thousands of Australian jobs under threat from Labor's scheme.

The package also protects farmers from the scheme by exempting agriculture altogether. By allowing agricultural offsets which include carbon sequestration in soils and vegetation, there is the opportunity for financial and land management benefits in the rural sector. This is a win/win for farmers and the environment.

By including voluntary measures, the environment will also benefit from individuals, businesses and community groups who develop their own initiatives to reduce greenhouse gas emissions.

The Coalition will continue to advocate an intensity-based cap and trade approach to the electricity sector, as this more than halves the initial increase in electricity prices, reducing the economic costs of achieving emissions cuts.

If the Government refuses to consider the intensity-based approach, it must clearly explain why, and work with the Coalition to provide an alternative strategy for cushioning the initial impact of higher electricity prices on small businesses.

The key amendments to Labor's flawed CPRS and the commitments required from the Government that will be sought by the Coalition are outlined below.

Trade Exposed Industries

  • Amend the CPRS to provide a single level of assistance for emissions intensive trade exposed (EITE) industries at 94.5 per cent until 2015 and 90 per cent thereafter.
  • Lower the threshold for assistance from the CPRS proposal of 1000 tonnes of CO2 per $1 million of revenue to 850 tonnes of CO2 per $1 million.
  • Continue to provide assistance to Australian EITE industries at 90 per cent until 80 per cent of their international competitors have also implemented carbon abatement measures.
  • Include primary food processing such as dairy and meat in the EITE scheme.
  • Allow industries that include a series of sequential or parallel production processes to have these assessed as a single activity in determining assistance.


  • Permanently exclude agricultural emissions from the CPRS.
  • Obtain Government agreement to introduction of an agricultural offset scheme in line with similar offset schemes to be introduced in comparable economies such as the US and EU.

Coal Mine Emissions

  • Exclude coal mine fugitive emissions from the CPRS.
  • Provide the Minister with authority to use regulation to control fugitive emissions with the objective of achieving a 30 per cent reduction by 2025 as technology and international best practice allow.

Lower Electricity Prices

  • Coalition will continue to advocate an intensity-based cap-and-trade model for generators. This delivers the same emissions cuts as the CPRS but with a much smaller increase in electricity prices.
  • This would greatly reduce the burden on small and mid-sized businesses, which receive no compensation for higher power bills under Labor's proposals.
  • Under the CPRS retail electricity prices will rise by close to 20 per cent in the first two years. Under an intensity approach, retail electricity prices would rise by less than 5 per cent in the first two years.
  • If the Government continues to refuse to consider the intensity model, the Coalition will negotiate for an alternative approach to cushion near-term electricity price increases for small businesses.

Compensation for Electricity Generators

  • Coal-fired generators must be better compensated for loss of value they experience from the CPRS, to ensure security of electricity supply and enable them to transition to lower emission energy sources.
  • The CPRS offers coal-fired generators 130 million permits over five years worth $3.6 billion. Yet three respected private sector analysts estimate their losses at $9–$11 billion.
  • Assistance should be increased to 390 million permits over 15 years (or about $10 billion). Assistance should be allocated to all generators in proportion to the losses they suffer.
  • In the absence of access to the Government's secret Morgan Stanley report, this represents the Coalition's best estimate of appropriate generator compensation given the available data.

Energy Efficiency and Voluntary Action

  • The Coalition will negotiate for a national "white certificate" energy efficiency scheme so households and businesses earn credits for efficiency measures, and contribute to reducing national emissions.
  • Likewise, the Coalition supports creation of a voluntary offset market in advance of the introduction of the CPRS, and amending the CPRS to ensure voluntary abatement leads to a lower national level of emissions.

The Coalition will negotiate the above matters with the Government in good faith, and in the expectation that the proposed emissions trading scheme can be improved to deliver the same environmental benefits with less severe economic costs.

The ball is now in Mr Rudd's court. If he wants to fix the flaws in his proposed emissions trading scheme, he needs to give Senator Wong the green light to engage with the Coalition and embrace our plan to save Australian jobs and reduce costs.

18 October 2009

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