After months of debate, Australia is dropping its plans for an ambitious carbon emissions trade scheme for at least three years due to Senate opposition and slow progress on a global climate pact, waiting until the Kyoto pact expires in 2012, according to Prime Minister Kevin Rudd, reports Reuters.
Global support for climate change legislation may be waning as the latest announcement comes in the wake of the U.S. Senate delaying the announcement of its climate and energy bill.
The promise of an emissions scheme helped elect Rudd in 2007 but public support has slipped, with another election due this year, reports Reuters. A delay could cut the 2010/2011 budget by A$2.5 billion ($2.3 billion).
Australia had planned to cut carbon emissions by 5 percent by 2020, which would have required 1,000 large emitters to buy carbon permits starting in July 2011. But industry opposition led to compensation for energy and trade-exposed industries such as AGL Energy, BlueScope steel and OneSteel.
Rudd says he remains committed to the target reduction of 5 percent by 2020.
The Australian Greens told Reuters the decision means that the government should look at interim alternatives like a levy on polluters.
Another option cited is a hybrid carbon trade scheme, with fixed-priced, longer term annual carbon permits.
The decision to delay the scheme also has sparked some trade in 2012 power contracts as well as a drop in pricing.
But it could also lead to job losses at banks and big companies, which had been preparing to trade carbon permits ahead of the planned July 2011 start, and within the government’s Climate Change Department, reports Reuters.