The carbon pollution reduction scheme

What are the implications of the CPRS for households?
 
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  • Updated:15 Jan 2009
 

02.Details of the CPRS

The Australian government has announced a scheme to reduce Australia' Greenhouse gas emissions through an emissions trading scheme to be called the Carbon Pollution Reduction Scheme (CPRS).

CHOICE agrees that action needs to be taken to reduce the likelihood of Australian's suffering from the impact of climate change. An emissions trading scheme is in principle and an appropriate way to do this.

But the scheme announced by the government is seriously flawed. CHOICE is lobbying for the scheme to be improved so it works in consumers' interests.

Australia currently has the highest greenhouse emissions per person of any country in the world. Excess greenhouse gas emissions, like carbon dioxide, result in an overall warming of the earth’s atmosphere. This warming will change the balance of the earth’s climate bringing bigger weather events, longer droughts and higher sea levels as ice caps melt.

Since the industrial revolution greenhouse gas emissions have grown globally. Currently, industry and consumers pay nothing to emit greenhouse gas pollution (often referred to as carbon pollution). There is no incentive to avoid emissions, nor to develop less polluting alternatives.

In the 2007 election, Australians voted for a government provide that promised leadership on climate change.

Learn more about climate change at www.climatechange.gov.au and www.bbc.co.uk.

Learn more about the risks for Australia.

Details of the Carbon Pollution Reduction Scheme

Like many other governments, the Australian government has decided to introduce a ‘cap and trade’ emissions trading scheme which will be known as the “Carbon Pollution Reduction Scheme” (CPRS). The CPRS is scheduled to commence 1 July 2011.

The CPRS works by setting a national limit, or ‘cap’, on the number of tonnes of greenhouse gases that polluters can emit. A limited number of ‘permits’ are then issued up to this cap. Each permit allows its owner to emit one tonne of greenhouse pollution.

The Australian Government has said it will legislate a target that by 2020 will see Australia emissions be 5%-25% less than what was emitted in 2000.

The scheme is mandatory for Australia’s biggest polluters, those 1000 companies responsible for about 75% of all of Australia’s emissions. These big polluters will be required to present a permit for each tonne of pollution they emitted in a given year. Some permits will be sold and some will be given away for reasons explained below.

In the first year of the scheme, 2011, an unlimited number of permits will be sold at $10 per tonne of emissions. From 2012, permits will be auctioned onto a newly established carbon market. This market will enable companies to trade permits like the share market. This encourages these companies to find the cheapest possible ways to cut pollution. Some companies will find it cheaper to find ways of reducing the amount of pollution they emit by installing new technologies or changing their behaviours. By cutting their pollution, these companies won't have to buy as many permits. For other companies, who find it hard to reduce their emissions, it will be cheaper to buy permits. Regardless of who's doing the work cutting pollution, the overall target level of pollution will still be met.

The scheme includes a number of other features to assist particular industries and households, including free permits issued to ‘trade exposed’ industries and coal-fired power stations; and compensation to households for likely increase in prices of goods and services.

Read the proposed legislation.

Understand more about the CPRS and the different viewpoints ('Heat on the Hill' - a Four Corners report).

What the CPRS means for households

Under the proposed target and Scheme, the following impacts can be expected for households following its launch in 2011:

  • Household costs will increase by 1.1%* on average. This impact will be offset for low and middle income earners to through direct payments and tax relief
  • There will be no increase to petrol as a result of the CPRS because of a cent-for-cent tax relief for any increase experienced through the CPRS by oil producers
  • Limited incentives, through the government's Energy Efficiency Homes Package, provides Australian households with insulation and solar hot water, reducing their energy consumption. However no comprehensive strategies have been announced by government to assist Australian households in reducing their energy consumption.
  • Voluntary action taken by households will not improve Australia’s total emissions but will put money back into the pocket of big business - read more here.

Read how the CPRS will affect consumers.

What you can do

Email Minister Wong through GreenPower: Keep it real!

*Amendments made by the government to the CPRS on 4th May 2009 require amendments to the government budgets. These are yet to be released.

 

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