Australia's Carbon Pollution Reduction Scheme

Australia’s Carbon Pollution Reduction SchemeBy Senator the Hon Penny Wong, Minister for Climate Change and Water, Australia 

Twelve months ago – as the first official act of the newly elected Rudd Government - Australia ratified the Kyoto Protocol. Now, Australia is taking another important step on the path to a low‑carbon future.

  On 15 December the Australian Government released its policy ‘White Paper’ on the Carbon Pollution Reduction Scheme. The White Paper sets out Australia’s medium and long-term emissions reduction goals and the design of Australia’s emissions trading regime, the primary vehicle to achieve those goals.  

Australia has a dual vulnerability to climate change. Already a hot and dry country, Australia will be particularly affected by rising temperatures and changing rainfall patterns. And as a small and open resource-based economy, Australia could face significant economic impacts from inefficient and uncoordinated action to reduce global emissions.


Nevertheless, Australia generates only 1.5 per cent of global emissions, so it cannot solve the climate change problem alone. Australia has a clear national interest in strong global action to achieve deep emission cuts, and efficient global policies to achieve cuts at least cost.


Having ratified the Kyoto Protocol, Australia is an active participant in international negotiations on global action to reduce emissions after 2012, when the first commitment period of the Protocol expires.


A global solution must be comprehensive, efficient and fair. It must involve developed and developing countries participating in action to slow and then reverse growth in emissions. Efficient market‑based mechanisms will be crucial, creating access to low‑cost emission reductions across all sectors of the global economy. National commitments will need to be differentiated to reflect national circumstances, including relative economic and social conditions.


Australia will make its full and fair contribution to the global effort.


Australia will meet its Kyoto target, limiting emissions to 8 per cent above 1990 levels over the 2008-2012. This represents a significant break from past trends. Without policy action, Australia’s emissions would have been 24 per cent above 1990 levels.


The next step is to reduce emissions in absolute terms. The White Paper sets out how Australia, for the first time in its history, will reverse its emissions trajectory.


Australia will reduce its emissions by at least 5 per cent, and by up to 15 per cent, below 2000 levels by 2020. This is equivalent to a 4-14 per cent reduction from 1990 levels, setting Australia on path to achieve its long term goal of a 60 per cent reduction from 2000 levels by 2050.


Irrespective of progress in international negotiations, the top of the range – a 5 per cent reduction on 2000 levels – is an unconditional commitment.


The bottom of the range – a 15 per cent reduction – signals Australia’s willingness to do more in the context of comprehensive global action. If all major economies – including developing countries – agree to substantially restrain emissions, and if all developed countries take on comparable emission reduction targets, then Australia will reduce its emissions by up to 15 per cent below 2000 levels by 2020.


These are ambitious and concrete targets. The range represents a 12‑22 percentage point reduction from Australia’s Kyoto commitment, from 108 per cent of 1990 levels in 2010 to between 86 and 96 per cent of 1990 levels in 2020.


Australia’s particular national circumstances – including its rapid population growth, large share of energy‑ and emission‑intensive industries, and heavy reliance on fossil fuels for energy – mean Australia faces a relatively greater structural adjustment task than many developed countries.


The level of ambition is very clear when the target range is considered in per capita terms. Australia’s projected rapid population growth over the 1990‑2020 period means the range translates to a 34‑41 per cent reduction in the emissions of every Australian.  This compares, for example, to the 24‑34 per cent reduction in the emissions of every European implied by the EU commitment to reduce emissions by at least 20 per cent below 1990 levels by 2020, and by up to 30 per cent in the context of strong commitments by other developed countries.


Australia is introducing one of the world’s most comprehensive and robust emissions trading regimes. The Scheme will cover 75 per cent of Australia’s emissions and will auction a high proportion of permits from its commencement. It will create incentives to reduce emissions across the whole economy, and stimulate sustainable low‑emission growth that will form the basis of Australia’s future prosperity.


By implementing the CPRS, the Australian Government will demonstrate that deep cuts in emissions are compatible with continuing economic growth and rising living standards.


In addition to domestic efforts, Australia is investing in a range of initiatives to contribute to the global solution, including considerable assistance for vulnerable countries in our region to adapt to unavoidable climate change.


Australia is firmly committed to providing practical assistance to the Asia-Pacific region to adapt to the impacts of climate change. This commitment is demonstrated by Australia’s recent allocation of $150 million over three years to meet high priority climate adaptation needs in vulnerable countries in our region. Support under the initiative will, for example, assist Pacific island countries to take meaningful action in response to climate change, including by improving their understanding of the impacts of climate change, supporting vulnerability assessments and financing high‑priority adaptation projects.


Australia is contributing to the global mitigation effort with a $200 million International Forest Carbon Initiative to support progress on reducing emissions from deforestation and forest degradation in developing countries.


Australia is playing a leading role investing in clean coal technology through the Global Carbon Capture and Storage (CCS) Initiative, announced by Prime Minister Rudd in September this year. The Initiative, which includes a Global CCS Institute, will drive the dissemination of CCS technology and know-how around the world.


Through its efforts, Australia aims to help build the confidence of all major emitters to take strong mitigation action. Working together, developed and developing countries can turn the global emission trajectory around, and put the world on the path to a low‑carbon future.