The Federal Government on Monday lifted its commitment to emissions reductions, raising the upper limit of its emissions reduction target to a 25 per cent cut on 2000 levels by 2020.
However, this upper target will apply only if an ambitious global agreement is reached which would stabilise levels of CO2 equivalent at 450 parts per million or lower by 2050. The Government has maintained its unconditional lower target at just 5 per cent.
The comes following significant criticism from environmental groups of the Government's original conservative proposed target of between 5 and 15 per cent cuts on 2000 levels by 2020.
In deciding to strengthen its stance, the Government reached a compromise with the Greens, who agreed to lower their demand from an upper limit of 40 per cent cuts to 25 per cent.
Mallesons Stephen Jaques partner Louis Chiam told Lawyers Weekly that while the increased upper target would be something for businesses to take into account, it was unlikely to cause considerable concern. "The 25 per cent will only come into being if there is an international agreement and if there is an international agreement it will actually make it easier for businesses to comply, because it will mean a level playing field across the economies," he said.
In addition, the Government has announced it will defer the proposed start date for the scheme by a year - moving it back to July 2011. While the news has already been the subject of media scrutiny, Chiam believes the change won't seriously affect the businesses involved.
"I actually don't think it's going to have a huge impact," he said. "The main thing businesses are keen on is certainty. They want to know 'Is there going to be a scheme or isn't there?'. The actual date of the scheme is less of an issue," he said. "For example, a lot of our clients are in the middle of reviewing their long-term contracts for carbon cost pass-through clauses, and if you're negotiating a contract today, those issues will still be relevant whether the scheme starts in 2010 or 2011."
Although the Federal Opposition was calling for the scheme's start date to be deferred for a year, Opposition leader Malcolm Turnbull yesterday said that it still won't support the bill in the senate.
"In short, Mr Rudd and Senator Wong have tinkered with a deeply flawed proposal that still looks likely to damage the economy, yet has not so far been demonstrated to be the most cost-effective or efficient way to reduce carbon emission," Turnbull said in a statement released yesterday.
Turnbull called on the Government to postpone attempting to put the scheme through the senate and instead refer it to the Productivity Commission "to assess whether it meets the nation's economic and environmental objectives".
"There is scant recognition of complementary measures and no evidence that this is the best way to reduce emissions. While the Government has delayed the start date, that's less important than getting the details right so we don't send jobs and industries offshore," he said.
However, there has already been significant investigation into the merits of an emissions trading scheme, with Professor Ross Garnaut last year finishing up an 18-month study into the impacts of climate change on the Australian economy and the various policy responses available.
In his final report released in September, Garnaut recommended the implementation of an emissions trading scheme committing Australia to reductions of 25 per cent of 2000 levels by 2020, and 90 per cent by 2050 if a global agreement could be reached, and an unconditional target of 5 per cent by 2020 otherwise.
The recommendations were the subject of significant criticism from environmental groups who called for higher 2020 targets.
- Zoe Lyon