Australian Senate Rejects Rudd's Cap and Trade Emissions Plan

By Gemma Daley
Bloomberg
Aug. 16, 2009

Aug. 13 (Bloomberg) -- Australia’s Senate rejected the government’s climate-change legislation, forcing Prime Minister Kevin Rudd to amend the bill or call an early election.

Senators voted 42 to 30 against the law, which included plans for a carbon trading system similar to one used in Europe. Australia, the world’s biggest coal exporter, was proposing to reduce greenhouse gases by between 5 percent and 15 percent of 2000 levels in the next decade.

Rudd, who needs support from seven senators outside the government to pass laws through the upper house, can resubmit the bill after making amendments. A second rejection after a three-month span would give him a trigger to call an election.

“We may lose this fight, but this issue will not go away,” Climate Change Minister Penny Wong told the Senate in Canberra. “Australia cannot afford for climate change to be unfinished business.”

Five members from the Australian Greens party sought bigger cuts to emissions while the opposition coalition and independent Senator Nick Xenophon wanted to wait for further studies on the plan’s impact on the economy.

Australia’s rainfall is the lowest of the world’s continents, excluding Antarctica, according to the Web site of Melbourne Water, a water management authority owned by the Victorian state government. Years of drought have cut farm output and water supplies in the Murray Darling Basin, the nation’s biggest river system and home to almost half its farms.

Sydney Opera House

Lower rainfall, higher sea and land temperatures, severe storms, increased acidity in the ocean or rising sea levels could all threaten World Heritage sites such as the Sydney Opera House and the Great Barrier Reef, a report from the Australian National University said last week.

Rudd planned to pursue a steeper 25 percent emissions cut pending an international accord stabilizing carbon levels. His administration wants the legislation in place before a December meeting of 200 countries in Copenhagen to replace the Kyoto Protocol. China and the U.S., the world’s largest polluters, have yet to commit to targets for cutting greenhouse gases.

“This defeat doesn’t make any difference to our position in global negotiations and it doesn’t add to momentum for those discussions,” said Andrew Macintosh, an analyst from Australian National University’s Center of Law and Climate Policy. “Copenhagen will provide some impetus for further negotiations on Australian laws.”

Corporate Opposition

The Australian legislation faced opposition from some companies that said the planned cuts were too deep and would have damped economic growth without making much difference to global warming. Advocates of tougher measures to combat climate change said the plan didn’t go far enough.

Royal Dutch Shell Plc’s Australian unit urged the government in May to revise the plan to avoid reducing the ability of local companies to compete internationally.

The U.S. House of Representatives approved legislation in June to limit heat-trapping pollution and create a trading system for pollution permits. The U.S. cap-and-trade bill must still pass the Senate.

The architects of Australia’s plan, approved by the lower house of parliament on June 4, sought to create an economic incentive to cut emissions by forcing heavy polluters to buy carbon credits. Emissions from Australia will grow to 120 percent of the 2000 level without a pollution reduction plan, Wong said earlier this month.

“Australia going it alone before Copenhagen will not make a jot of difference,” Liberal Senator Eric Abetz said. “It is a dog of a plan and we will not support it in its current form.”

Bill Amendments

The government can resubmit legislation after negotiating with industry, Senators and conservationists. Parliament will hold three more two-week sessions this year starting on Sept. 7, Oct. 19 and Nov. 16. It then adjourns until 2010.

“The government will consider any serious amendment,” Wong said. “We will press on for as long as we have to, we will bring this bill back before the end of the year.”

The Copenhagen accord aims to reach an agreement to slow greenhouse-gas emissions and shift the world to low-carbon energy sources.

China and other developing nations reject calls for binding targets, arguing that rich nations fueled their growth while polluting for decades. Getting China, the world’s fastest- growing major economy, to commit to lowering emissions is a key goal for Copenhagen.

The global credit crisis, which has plunged most developed economies into recession, has blunted the fight to tackle climate change. Australia’s government has spent A$90 billion ($75 billion) on economic stimulus.

“Climate has slipped down the list of priorities for Australians and they won’t like going to an early poll on it,” Macintosh said. “Climate has gone on the backburner because of the economic climate we have found ourselves in.”

To contact the reporter on this story: Gemma Daley in Canberra at [email protected]