Oct 20, 2009

Carbon Pollution Reduction Scheme - Quick facts

Below are some brief and essential points about the CPRS legislation:

1) The title is misleading - the scheme is about carbon dioxide, and carbon dioxide is not "pollution."  It is a greenhouse gas that is essential to all plant life on the planet.  Just like water vapour - it's a greenhouse gas that's essential to all life - but we don't call water vapour "pollution", do we?

2) The scheme is designed to put a price on carbon dioxide emissions, and for the price of emissions permits to be decided by the INTERNATIONAL TRADING of such permits.*

3) Nobody knows what these permits will cost after 2012, so we have little idea what financial impact the system will have on Australian families or businesses in the medium and long-term.*  We do know that the government is forecasting that it will recieve income of about $12.5 billion in 2012 from the sale of permits - that's equivalent to a 25% increase in the GST.

4) The government's modelling suggests the scheme WILL NOT affect emissions by our power-stations - which are currently the biggest emitters of CO2 in Australia.  This suggests the scheme may be of questionable effectiveness.

5) The scheme currently has a target of a 5% reduction (as a minimum) by 2020 - we currently contribute about 1.5% to world emissions.  So the scheme has a target of reducing world emissions by only 0.075% over the next 10 years.

*technical note: according the Department of Climate Change website, the export of emissions permits will not be allowed initially.  However, it is not clear that the scheme will make it illegal for a company to buy Australian emissions and sell international emissions at the same time, or use derivative products linked to emissions permits (or employ some other similar strategy) - if any of these strategies are allowed, then the price of emissions permits in Australia IS likely to rise to meet the international price (in the event that the international price is higher).

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