Opposing plans compatible

KEVIN Rudd's emissions trading scheme and Tony Abbott's "direct action plan" are being pitted against each other as if they are polar opposites, but most developed countries plan to use a bit of both to reduce their greenhouse gas emissions.

In fact, if the Carbon Pollution Reduction Scheme had passed the Senate, Australia, too, would be using a bit of both - a carbon price as the main driver of emission reductions - and a raft of other policies including solar rebates, pink batts subsidies and grants for large-scale solar, clean coal and geothermal projects.

But every other developed nation envisages some form of carbon price as a key plank of its policy, and none currently plans to rely solely on direct action.

The Obama administration may yet be forced to a regulatory solution if it is unable to get its cap-and-trade emissions trading bill through the Senate, where the legislation remains stalled.

President Barack Obama has now dropped projected revenue from the scheme from his budget, a sign of growing uncertainty about its prospects.

The US has a long list of climate-related regulation already in place, including the subsidies in Mr Obama's economic stimulus plan for energy-efficient buildings, clean energy and transport. And last December, the US Environmental Protection Agency ruled that greenhouse gases posed a threat to human health, meaning it can now use the Clean Air Act to regulate greenhouse emissions directly without legislation.

Canada is adopting a wait-and-see approach, saying it will introduce cap-and-trade if the US legislation makes it through.

The European Union has an ETS that will cover about 45 per cent of emissions, but uses regulation to drive emissions down in the transport and agricultural sectors.

Japan has also proposed a cap-and-trade scheme or a carbon levy to meet a promised 25 per cent emission reduction by 2020, but has yet to enact either.

The Coalition has left open the possibility that it could move to some form of carbon market over time, saying its policy would be reviewed in 2015. But Opposition Leader Tony Abbott has also said it would be possible to "rachet up" the direct-action measures to meet a higher emission-reduction target than the minimum 5 per cent both Labor and the Coalition have so far committed to.