Industry helping to shape ALP emissions policy

Labor is working with big polluters on a new carbon trading scheme using a system of Abbott government emissions caps.

Labor climate change spokesman Mark Butler. Picture: Sarah Reed

Labor is working with big polluters on a new carbon trading scheme using a system of Abbott government emissions caps on individual businesses as the basis for the new regime.

The Australian understands the government’s existing Safeguard Mechanism, a registry of emissions caps for businesses emitting more than 100,000 tonnes of ­carbon a year, will be used as the framework for the Labor scheme.

The mechanism, overseen by the Clean Energy Regulator, sets emissions caps for Australia’s 140 largest carbon dioxide emitters, which would be lowered over time in line with Labor’s promised 45 per cent emissions cuts on 2005 levels by 2030.

Labor climate change spokesman Mark Butler has been working behind the scenes with big manufacturers to bed down the proposed policy, which would reintroduce carbon trading for Australian businesses for the first time since the repeal of the Gillard government’s carbon tax by Tony ­Abbott in late 2013.

As part of the consultation, Mr Butler has promised energy-­intensive, trade-exposed businesses, known as EITEs, that they would not face new costs that would cripple their ability to compete internationally.

Tomago Aluminium chief executive Matt Howell met Mr Butler recently to discuss the ­policy. He said he was satisfied it would not put EITEs such as Tomago — the nation’s biggest single site energy user — at a disadvantage in the international market.

“Mark Butler understands the special nature of aluminium smelting, the size and scale of our business, and the fact that we can’t pass these costs on,” Mr Howell said.

The carbon trading system would not include a government-imposed carbon price but would allow firms that undershot their targets to generate carbon credits that could be traded with companies that exceeded their caps.

Labor would also allow companies to purchase international and domestic carbon credits to offset their emissions.

The Safeguard Mechanism was established under Mr Abbott’s ­Direct Action policy to ensure taxpayer investments in cutting carbon emissions were not offset by increases in emissions elsewhere in the economy.

The advantage for the Labor Party of using the mechanism as the basis for the new climate change policy is industry is comfortable with the system, and it avoids starting “with a blank sheet of paper”.

Separate policies are planned for the transport and agriculture sectors, while Labor’s energy policy announced last week would be based on the government’s now-abandoned national energy guarantee, underpinned by a 45 per cent emissions cut, a 50 per cent renewable energy target and new subsidies for battery storage.

Scott Morrison today warned that Labor’s “reckless” 45 per cent carbon emissions cuts would swing a “wrecking ball” through the economy.

“A 45 per cent emissions reduction target is a job-destroying, economy-destroying tax on electricity which will undermine the strength of our economy,” the Prime Minister said.

A succession of Labor MPs have in recent days refused to rule out putting a price on carbon, prompting a warning of a “carbon tax 2.0” under Labor.