The Government said that it has deferred the start of the CPRS to allow the Australian economy more time to recover from the impacts of the global recession, and will commence on 1 July 2011 with an one-year fixed price phase.

During the fixed-price phase, an unlimited number of carbon permits will be issued to liable companies at a price of $A10 per tonne.

A price cap will apply from commencement of the CPRS, with the 5-year emissions-intensive trade-exposed (EITE) review to look at whether the price cap should continue in the future.

The Government said that an additional Global Recession Buffer will be provided for EITE industries for the first five years of the CPRS.

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This buffer will provide 5 per cent more free permits for EITE activities eligible for 90 per cent assistance, giving an effective rate of assistance of almost 95 per cent to these highly EITE activities in the fist year of the scheme.

The buffer will provide an additional 10 per cent free permits for EITE activities eligible for 60 per cent assistance, giving an effective rate of assistance of 66 per cent to these moderately EITE activities in the first year of the scheme.

In addition, the Rudd Government has committed to reduce Australia’s carbon pollution by 25 per cent below 2000 levels by 2020 if the world agrees to a global deal to stabilise levels of carbon dioxide equivalent at 450 parts per million or lower by mid-century.

If the world achieves this agreement, the Federal Government said that Australia will meet its 25 per cent target by implementing the CPRS, the expanded Renewable Energy Target, and with substantial investment in clean, renewable energy, energy efficiency and carbon capture and storage. The Australian Petroleum Production and Exploration Association (APPEA) has said that changes to the ETS are a start, but aren’t enough.

“It remains the case that this scheme imposes a cost on Australia’s LNG without acknowledging the benefits of the role that the industry should play in substituting for less greenhouse intensive sources of energy around the world,” APPEA chief executive officer Belinda Robinson said.

APPEA has said that the natural gas produced from the industry’s $200 billion worth of planned projects will see 180 MMt/a of greenhouse gas emissions avoided.

Woodside Petroleum chief executive officer Don Voelte has also commented, stating that the changes to the ETS are like “putting lipstick on a pig”.

Mr Voelte said that the changes are inconsequential and will still unfairly burden the LNG industry.

“When we’re investing $20 or $30 billion in a fifty-year project, a one year delay really doesn’t mean anything.”

Mr Voelte pointed out that the flow of capital in overseas markets is a threat to Australian industry and jobs, and called for permits in emissions-intensive trade-exposed industry to be 100 per cent free until a global solution can be reached.

“Until there is a global solution, until our other competitors have the same costs that we have to bear, there really needs to be a ‘no net increase in cost’ solution in the legislation,” he said.