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Odds against CPRS in Senate

Odds against CPRS in Senate

With the Rudd Government's Carbon Pollution Reduction Scheme (CPRS) up before the Senate for the first time today (13 August), businesses are hopeful, though not exactly confident, that they'll…

With the Rudd Government's Carbon Pollution Reduction Scheme (CPRS) up before the Senate for the first time today (13 August), businesses are hopeful, though not exactly confident, that they'll finally get the certainty they need.

Deacons partner Elisa de Wit, for one, isn't optimistic about the CPRS's Senate chances this time around. "I would say it's very low - minimal," she told Lawyers Weekly yesterday. "But in three months' time, when it's put back, possibly there's a better chance."

On Monday, Opposition Leader Malcolm Turnbull released details of a report, commissioned by the Opposition and produced by Frontier Economics, which recommended a number of amendments to the Government's proposed CPRS structure.

He also made it clear that - based on the Frontier Economics report - that the Opposition is unlikely to support the CPRS in its current form in tomorrow's Senate sitting.

"The results make it clear that the Rudd Government should immediately withdraw its CPRS legislation and begin negotiations with the Opposition, minor party Senators, and other stakeholders to design a more efficient scheme," he said in a statement on Monday.

The key recommendations in the Frontier Economics report include allocating permits to electricity generators using a baseline approach, effectively increasing the level of compensation to this sector significantly. They also suggest providing 100 per cent shielding to emissions-intensive trade-exposed industries, rather than the staggered, partial protection offered under the Government's scheme. The report also recommends doubling the unconditional emissions reduction target to a 10 per cent reduction on 2000 levels by 2020 (up from 5 per cent).

By upping compensation to electricity generators, the Opposition argues that significant electricity price rises at the outset can be avoided, with prices instead increasing gradually over a 20-year period.

However, countering this, De Wit says, is the argument that electricity prices rises are necessary to invoke behavioural change towards less energy-intensive lifestyles.

"Ultimately, what emissions trading is designed to achieve is to put a price on carbon in order to change behaviour, so that people look at reducing their energy consumption, or look at ways of changing their lifestyle or practices, so that emissions are ultimately reduced," she said. "The argument against what Frontier Economics is suggesting is that if you don't have increased prices, you're not going to get behavioural change - so it doesn't achieve the objective of ultimately what an emissions trading scheme is designed to do."

While the CPRS is unlikely to pass through the senate today, De Wit says there will be pressure on the Coalition to reach agreement with the Government before the next Senate review in three months. In particular, she says, given the extensive consultation process that proceeded the release of the Carbon Pollution Reduction Scheme Bill 2009 - which included the release of the Green Paper, the Garnaut Review, the White Paper and release of exposure draft legislation and a further consultation period - businesses are becoming increasingly frustrated with the approach the Opposition is taking.

"It's instructive to remember that before the Labor Party got into power a decision had been made by the Liberal Party to pursue an emissions trading scheme ... and, obviously, there has been a very detailed and comprehensive consultation process since that time," she said.

"So, in terms of the Coalition's position, there has been frustration from a number of sectors - not just the Labor party - about where things have got to. The point has been made that spending six weeks to prepare [the Frontier Economics report] at this late stage - when there's been all these other opportunities for the Liberals and Coalition to have input into the design of the scheme - is perhaps a bit late in the day."

She says that, given this pressure from business, she is hopeful that the legislation will pass through the Senate when it comes up for review again. "And certainly that's the Government's preference, so that they can go to Copenhagen with the legislation in place, because I think that's going to put them in a better position to contribute to those global discussions about the post-Kyoto regime," she said.

- Zoe Lyon

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