Australia Scheme to Compensate Big Carbon Emitters

Australia unveiled plans for one of the world's biggest carbon trading schemes, which will make mining operators accountable for the amount of carbon they emmitt.

The centre-left government, which swept to victory last year on the back of fury among working voters at rising prices under conservative rule, released an options paper for how emissions trading is likely to work from 1 July, 2010.

"The effect of putting a price on carbon will be profound," climate change Minister Penny Wong said in a television address. "Placing a limit and a price on pollution will change the things we produce, the way we produce them, and the things we buy."

Australia is the world's biggest per-head polluter, with each person producing five times more emissions than the average in China.

The government's plan aims to curb carbon emissions by forcing 1,000 of Australia's biggest-polluting firms, including global miners BHP Billiton and Rio Tinto to buy permits placing a cost on emissions.

The regime would cover 75% of emissions in the A$1tr ($980bn) economy, with the inclusion of fuel from the 2010 start and hard-to-measure agricultural emissions from 2015, the government said.

The largest polluters, producing more than 2,000 tonnes of carbon emissions per A$1m of revenue, would initially pay for only 10% of their total emissions. Companies producing between 1,500-2,000 tonnes would pay for 40% of emissions.

Assistance would taper off with time to allow companies to replace dirty technology with cleaner production methods, the report said.

Other energy-intensive firms like cement and aluminium manufacturers exposed to cheap competitors in Asia would also receive grants from a new Climate Change Action Fund to be set up with the proceeds of emission permit sales.

Climate experts said the scheme could be a model for Asia and fuse with an eventual global emissions trading system.

The report did not say what Australia's overall emissions cap should be or put a price on carbon emissions apart from a working assumption of A$20 a tonne, used for inflation impact estimates.

Emissions trade around the report's release indicated a soft start to the scheme in 2010, with initial prices starting at A$19-A$20 a tonne, but "speculative" buyers offering A$16, said Gary Cox, Manager of Environmental Derivatives at the Newedge Group in Sydney, which brokered one of six deals.

By Rob Taylor and James Thornhill, Reuters .