Federal Coalition laboured to produce a Clayton's CPRS

Under the headline Coalition Plan to Save Jobs and Reduce Costs, yesterday the Liberal Party and Nationals Coalition produced a train wreck of an emissions trading scheme outline, with its published list of 'amendments' to the Rudd Government's proposed Carbon Pollution Reduction Scheme.

Set out below is what Malcolm Turnbull (with the approval of his shadow cabinet/party room) wants to negotiate in allegedly good faith.

I particularly like the fact that, on the face of it, 90 per cent of carbon credit permits will apparently be free to major polluters virtually forever after - which leads to the inevitable question; "Why bother to implement an emissions trading scheme in the first place?".

Which would of course be the whole aim of this Coalition exercise in intransigent anti-global warming spin.

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.

Agriculture

• 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

• The 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.