Swan scraps carbon trade inquiry

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The Commonwealth is coming under further pressure on its proposed emissions trading scheme, cancelling an inquiry into it and facing calls to amend the legislation from the ACT Government.

Australia Institute executive director Richard Denniss said the proposed scheme created a floor on emissions cuts, meaning no matter what anyone did, greenhouse gases could only be reduced by the 5per cent target. This was because any other cuts, such as the 30per cent proposed for the ACT, would mean there was an equivalent amount of permits available for polluters to buy and use elsewhere.

ACT Environment Minister Simon Corbell said it was a legitimate concern, which he raised at a recent ministerial council meeting. ”This is a potential flaw in the scheme, it may be able to be addressed through technical revisions to the scheme and the territory will be pursuing the matter further, both through the Senate inquiry and also directly between ministers,” he said.

But he said other states, which had higher emissions, would have to also lobby the Commonwealth to get the laws amended.

”I don’t believe this is an issue that the ACT can champion on its own. We will raise it and we will highlight the problems with it. I think without the support of other jurisdictions the issue won’t be resolved,” he said.

ACT Greens environment spokesman Shane Rattenbury said the territory was showing leadership on climate change and its ministers should use the moral high ground to ensure the Federal Government improved the scheme.

Questions were raised about the Federal Government’s commitment to the scheme when Labor MP Craig Thompson said yesterday morning his economics committee, which was to examine whether it was the best way to lower emissions, would report before the legislation was debated.

The committee was to report by late this year, but the legislation needs to be passed about July so the scheme can begin mid-2010.

Mr Thomson said at lunchtime he wanted his committee to put out an interim report in May instead, but things changed again last night when Treasurer Wayne Swan asked him to cancel the inquiry ”because the inquiry’s terms of reference became politicised and distorted”.

The Coalition also appeared to shift ground on the issue yesterday. Emissions trading spokesman Andrew Robb said in the morning the Opposition would be open-minded and look at all options, including a carbon tax. But Opposition Leader Malcolm Turnbull appeared to overrule him, saying he still supported emissions trading.

Greens Leader Bob Brown prefers a trading scheme, because it provides greater certainty of greenhouse gas reductions, but said a strong target he wants it to be 40per cent and 2010 start-up were most important. ”The Rudd Government’s 5per cent target and the billions of dollars it is planning to handout to big polluters will hold Australia’s economy back,” he said.

Climate Change Minister Penny Wong will tell economists in Sydney today that deferring the trading system because of the economic downturn would ”increase investment uncertainty at precisely the wrong time”.

She will reject calls for a carbon tax because it did not provide the certainty of reduce emissions, a draft of her speech shows.

”It will inspire companies to find new and innovative ways to reduce their emissions and spur investment in new, low-emission technologies,” the speech said.