Emissions Trading Report released

National Emissions Trading Scheme: generation emissions capped from 2010; and big users get

Two models aligned: In both the MMRF-Green and MMA models, Base Case oil prices were adjusted to conform to the International Energy Agency’s World Energy Outlook 2005 Reference Case, for oil prices reaching US (2004) $39 by 2030.

Phased coverage of sectors under the ETS: Electricity generation combustion-only emissions were capped from 2010 on, according to Scenario emissions trajectory required to hit the relevant Scenario target — generating the Scenario carbon price. Non-electricity Stationary Energy sector (that is, direct use of gas and coal) was included in ETS from 2015 on — these sectors then faced the same carbon penalty as the electricity generation sector. Other sectors (for example Fugitive, Agricultural etc) did not face the carbon penalty in the Domestic Action modelling.

Permits: Permits were allocated to electricity generators over the whole period 2010 to 2030. Emissions permits were allocated, by ‘technology class’ by state, sufficient to offset each ‘technology class’ net loss in profits. Generators were free to use permits to optimize profits (so still had incentives to improve efficiency of fuel use etc).

100 per cent compo for big users: Energy intensive trade exposed industries were compensated for 100 per cent of increased energy costs for the period 2010 to 2030. Compensation was applied to those sectors which have non-transport energy costs with a more than 3.5 per cent share of total operating expenses in 2003-04 in the MMRF-Green model.

Reference: The Economic Impacts of a National Emissions Trading Scheme, Final Report. June 2006. The Allen Consulting Group report to National Emissions Trading Taskforce. p.11. email: info@allenconsult.com.au website: http://www.allenconsult.com.au Document can be found at http://www.emissiontrading.com.au

Erisk Net, 22/8/2006

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