Swan Talks Up Carbon Tax Compensation

Treasurer Wayne Swan is talking up carbon tax compensation cheques for Australian households a month before the federal budget.

Mr Swan has defended the scheme to hand out carbon tax compensation even as the government faces a tough budget with declining revenues.

Pensioners and families with children eligible for family tax benefits will start to receive cheques in coming weeks.

"We raise revenue from the carbon price, and we use that revenue to assist with the price impacts which are relatively small," Mr Swan told ABC Radio on Monday.

"The fact is we've got to look our kids in the eye and say we did the right thing .... to reduce carbon pollution into the atmosphere, to combat dangerous climate change, but also to assist people with the price impacts of that."

He could not say how much an advertising blitz about the compensation package would cost because it was still under government consideration.

"We will have to advertise some of the important parts of this package so people know what they're getting and why they are getting it," Mr Swan said.

"There's nothing unusual about that at all, nothing unusual at all."
Mr Swan said restoring a budget surplus was entirely appropriate.

"It's very important given this global instability and uncertainty that Australia sends a message to the world that our financials are strong, but also giving the Reserve Bank room to move, should it wish to do so, in terms of interest rates at some stage in the future," he said.

Alumina Rejects Wagerup Carbon Tax Claim

Alumina Ltd says the high cost of construction in Western Australia rather than the carbon tax is a key reason that the expansion of its Wagerup alumina refinery has stalled.

WA's Environmental Protection Authority on Monday granted AWAC, Alumina and Alcoa's joint venture company, an extension until September 2016 to substantially commence the expansion that was first given environmental approval in 2006.

The Australian newspaper this week reported an Alcoa spokeswoman as saying the company would not revisit the expansion until it had a clearer picture of the full impact of the carbon tax, due to start on July 1.

The media report also cited the need to secure energy supplies, which Alumina chief executive John Bevan concurred with on Thursday.

But, Mr Bevan said, it was 'not the case' that the carbon tax was the key reason the project was not yet going ahead.

'The capital cost of building in WA is high, as seen with BHP's Worsley (refinery),' Mr Bevan told a conference call for analysts.

The cost of expanding BHP Billiton's Worsley alumina refinery in WA has blown out substantially due to factors including inflationary pressures and the stronger Australian dollar.

This had prompted analysts to speculate recently that the asset may be sold by the mining giant.

Alcoa last week announced that AWAC could close one of its two Australian aluminium smelters, Point Henry in Victoria, in the face of continuing difficult global economic conditions for the industry.

The company warned in January that it planned to close or curtail about 12 per cent of its global smelting capacity to improve its competitiveness amid falling aluminium prices and escalating raw materials costs.

The Point Henry announcement triggered a parliamentary furore, with federal Opposition Leader Tony Abbott blaming the possible closure on the government's carbon tax.

Prime Minister Julia Gillard labelled his comments a disgrace given that 600 jobs at the smelter hung in the balance.

'It (the potential Point Henry closure) is really not firm at this stage,' Mr Bevan said on Thursday, adding that Alcoa's global curtailments would occur in the next four or five months.

In delivering a near fourfold surge in full-year net profit on Thursday, Alumina said costs at Point Henry and its other aluminium smelter in Portland, Victoria, were last year pushed up by increased alumina and coke prices, and the rising Australian dollar.

Alumina booked a net profit for the 12 months to December 31 of $US127 million ($A119.16 million), up from $US35 million ($A32.84 million) for the 2010 calendar year.

Mr Bevan said margins rose after the company moved to price some of its alumina on an index/spot basis.

Morningstar analyst Mark Taylor said a 55 per cent rise in underlying earnings to $US128 million beat the investment research firm's forecast of $US113 million ($A106.02 million).

The company to maintain its full year dividend at six cents per share.

Mr Bevan said the company was cautious on the outlook for 2012, reflecting volatile pricing conditions, a strong Australian dollar and high input costs.

Conditions deteriorated towards the end of 2011, with prices for Alumina's products falling significantly.

Shares in Alumina closed up 1.5 cents, or 1.3 per cent, at $1.17.

Suffocating the Economy One Tax at a Time

If implemented, Julia Gillard's proposed carbon price starting at $23 per tonne will push us closer to economic stagnation.

If the Government wanted to make the 159 million tonnes saving in 2020 it seeks, it would not attempt to do this with a domestic tax. According to the Government's Securing a Clean Future report, half of the saved emissions are domestically derived.

If the price is $30 per tonne this will involve an annual cost of $2.385 billion incurred in overseas buying. The cost of achieving the emission reduction locally if the price is $30 per tonne is incurred on all the remaining emissions (336 million tonnes). That comes to $10.08 billion. This begs the question that since carbon dioxide is the same the world over why not buy all our emissions overseas? At $30 per tonne, 159 megatonnes of emissions costs $4.77 billion, which is far less costly than striving to do it with the mix of local ($10.08 billion) plus overseas ($2.385 billion) giving a total of $12.465 billion.

Even without a carbon tax, Australia's energy price regulator has reported an expected increase of 30 per cent in electricity prices over the next three years, largely due to higher 'poles and wires' costs. For New South Wales, the state's pricing tribunal has announced a 17 per cent electricity increase for next year, a third of which is for "green schemes".

Against this backdrop last month's Productivity Commission (PC) report, Carbon Emission Policies in Key Economies examined over 1,000 abatement reduction schemes across eight countries. These are overwhelmingly focused on electricity, and the PC converted them into carbon tax equivalents.

The PC's analysis illustrates that taxes are high and substantial abatement is taking place in the European Union (EU). In Germany and the UK carbon dioxide emission programs bring increases of 12-17 per cent in electricity prices (though the recent slump in the EU carbon price will reduce this considerably).

For Australia and New Zealand the emission control programs currently bring electricity price increases of 1-2 per cent, while in China, US, Japan and South Korea the effect is negligible. And Australia's main scheme, the 20 per cent Renewable Energy Target, is only just gearing up to cost levels that by 2020 will be perhaps tenfold those of today.

Australia's trading rivals are among the 170-odd other countries which the PC did not examine. In fact, exporters of fuel and raw materials in Canada, South Africa, Brazil, Indonesia, India and the Middle East face negligible carbon abatement costs and already have tax advantages over Australia's exporters. Carbon taxes figured prominently in the Canadian Liberal Party's platform in that country's recent election and the party suffered its worst defeat in a century.

Although no country has a carbon tax, the PC's material demonstrates that cap-and-trade market mechanisms offer cheaper means of bringing about abatement than specified regulatory measures like renewable programs. Thus Germany's costs under the European Union's cap-and-trade carbon tax were about $20 per tonne of CO2 (for shifting from coal to gas) but costs under specific measures requiring wind and solar use on average $137 per tonne.

Australia's schemes involving feed-in tariffs for small scale renewable systems come at a CO2 price of up to $425 per tonne. Wind farms cost $37-69 per tonne.

The PC estimates that a carbon tax set at $9 per tonne could replace all existing Australian measures and notes that a tax is less inefficient than 'direct action' approaches favoured by the Opposition.

However, the current abatement measures requiring renewables are also direct action approaches and the Government wants these to be retained alongside a carbon tax. Moreover, it is negotiating for another direct action proposal, involving closure of Victoria's Hazelwood power station. That closure could reduce emissions by 3 per cent but only in the unlikely event that the station's output is not replaced by output from other fossil fuel sources.

The Productivity Commission estimated the cost of Australian emission reduction programs at $473-694 million in terms of total subsidy equivalent. But this excludes direct government subsidies. The Department of Climate Change and Energy Efficiency (DCCEE) provides an "A to Z" of (Commonwealth) Government initiatives. Ranging from Advanced Electricity Storage Technologies to the World Bank Clean Technology Fund, these comprise 93 separate programs. DCCEE put Australia's budget expenditures on abatement measures totalled $1.069 billion in 2009/10. The Government's package budgets for $4.2 billion in 2014/15 in the Clean Energy Finance Corporation and other supports for green energy and conservation.

In addition to excluding direct budgetary spending in estimating Australia's carbon tax rate, the PC also does not count the effects of a range of standards. A previous commission report had put the annual costs of greenhouse abatement measures embodied in the national five/six-star building standards at $3 billion a year.

Clearly Australia outlays much more than the $473-694 million the PC used to estimate Australia's greenhouse abatement costs. Our expenditures are much higher than those of our competitors and the carbon tax would further increase the baggage we have to carry.

The outcome would be a spiralling down of our living standards relative to those of other resource rich countries.

But the carbon tax is only the latest blow. To restore the nation's competitiveness, a future Coalition government must both revoke any carbon tax that is introduced and purge the economy-killing measures that have been gathering moss over the past few years.

To start this ball rolling, the O'Farrell Government is calling for the repeal of the Commonwealth's 20 per cent Renewable Energy Target. And the Nationals Senator Ron Boswell has made similar moves in the Coalition party room by seeking to have support for the target reviewed by a policy committee.

With his 'direct action' approach Tony Abbott expects to achieve the Government 5 per cent reduction in emissions but at a lower cost than a carbon tax involves. That is implausibly optimistic. But more significantly he has announced a review of policies for 2015, an action which foreshadows an unwinding of the green juggernaut.

Alan Moran is the Director, Deregulation at the Institute of Public Affairs.

Carbon tax: Heat rises as voters reject Julia Gillard's plan

ANGRY Australians have vowed to vote Julia Gillard from office at the next election after yesterday's controversial carbon tax announcement.

Scores of voters rejected the plan soon after details of the $24.5 billion package to tackle climate change were revealed, with more than 80 per cent who voted in a national News Limited online poll saying Australia shouldn't have a carbon tax.

Almost 100,000 people voted across four polls in the national plebiscite by 5pm yesterday, with 87.1 per cent saying they planned to change their vote at the next election in light of the tax.

More than 70 per cent of voters, or 15,866 people, said they now planned to vote for the Coalition at the next election while just 8.51 per cent said they would support a Labor government.

Just 13 per cent of voters said they wouldn't change their vote at the next election.

Despite government claims that 90 per cent of Australians would receive compensation, and that 40 per cent of households would be overcompensated, voters said Julia Gillard had signer her fate at the polls.

"They're calling it 'Carbon Sunday' but I like to refer to today as 'Suicide Sunday' for a PM and three independents,'' one reader wrote.

"I cannot wait until the next election. The Labor Party the Greens and the Independants will answer to the Australian people for what they are inflicting upon us. Revenge is a dish best served cold,'' wrote another.

Eighty per cent of voters described the tax as "disgraceful'' while others said it was "inadequate''.

Just eight per cent of voters said they were confident it wouldn't affect their hip pocket.

An anti-carbon tax group said its website crashed after being overwhelmed with people trying to sign up to a campaign rejecting the tax.

The organisers of the site, no-carbon-tax.org, said the site crashed because of the "sheer numbers of people signing up.''

Jobs at Risk From Carbon Tax: CSR Chief

The chief executive of CSR, one of the country’s largest building materials companies, has hit out at the federal government’s proposed carbon tax, saying it will not reduce world carbon emissions and would ultimately drive Australian manufacturing jobs offshore.

With the government set to announce details of the tax this weekend, Rob Sindel used his address to shareholders at CSR’s annual meeting in Melbourne to add to the chorus of business leaders in heavy industries critical of the tax.

He said trade-exposed industries must be given adequate assistance or a mass exodus of manufacturing jobs would result.

‘‘Our message to government is clear,’’ Mr Sindel said.

‘‘All trade-exposed industries must receive full transitional assistance until the rest of the world imposes a similar carbon cost.’’

Shares in carbon-intensive steel producers like BlueScope and OneSteel have rallied sharply in the past week over growing speculation they and other heavy polluters will be almost fully shielded from the carbon tax in the first few years through transitional assistance.

Mr Sindel said CSR’s glass and aluminium businesses was also likely to receive the highest level of transitional assistance but said the rate at which the assistance would be phased out was a critical factor.

‘‘The decay rate is the real sleeper in this,’’ he said.

If the assistance was phased out too quickly, Mr Sindel said 1 million manufacturing jobs, including 4000 from CSR, would be at risk.

‘‘We will fight to protect Australian industry and these jobs,’’ he said.

The country’s largest brickmaker, Brickworks has also made its stance clear against the tax, saying it will increase the cost of housing and spark an exodus of manufacturing jobs and foreign investment.

Mr Sindel said if the government was serious about carbon reduction, it would do more to increase energy efficiency in the building environment. Mr Sindel said buildings accounted for 30 per cent of the country’s energy consumption, of which 40 per cent was wasted.

The Gillard government's carbon tax is expected to start at $23 a tonne and be paid by 500 companies rather than almost 1000 liable under earlier estimates after it decided to remove fuel from the pricing scheme.

pwen@fairfaxmedia.com.au

Andrew Wilkie Says Julia Gillard Must Improve Carbon Tax Sales Job to Regain Public Confidence

TASMANIAN independent Andrew Wilkie has told Julia Gillard to improve her carbon tax sales job amid plummeting public support for the measure.

As fellow crossbencher Rob Oakeshott played down the latest Newspoll - showing only 30 per cent support for the tax - Mr Wilkie said the government had to do something to restore public confidence in the measure.

“Clearly the government does need to do a better job at selling a price on carbon if it is to regain the broad-based support it enjoyed last year,” he told The Australian Online.

Today's Newspoll survey reveals 78 per cent of Australians believe in climate change but 60 per cent oppose Labor's proposed carbon tax.

Mr Oakeshott urged voters to recognise the “economic opportunity and economic importance” of the carbon tax.

“No-one in this business is trying to do anyone any harm,” he said.

“We are trying to do public good in the long term and sometimes that requires some difficult decisions along the way. Everyone is trying to do a public good here.”

Mr Wilkie also offered conditional support for the tax.

“I continue to support a price on carbon so long as the settings are right,” he told The Australian Online.

“Most relevant to me is that Tasmania's overwhelming reliance on renewable energy, and capacity to lock up carbon through forestry, be properly factored into the settings being developed.”

The government will need the support of both MPs, plus independent Tony Windor and Green Adam Bandt, if its carbon tax is to get through the House of Representatives.

As the government seeks business support for the plan, Nationals Leader Warren Truss today accused it of leaving families and small businesses out in the cold.

Mr Truss said the Prime Minister's dinner invitation to big polluters at Kirribilli House tonight showed she was increasingly out of touch with the needs of everyday Australians.

“While Julia Gillard cosies up to the big end of town tonight, wining and dining big business to woo carbon tax support, small business and families are on the outside looking in,” he said.

“Ordinary Australians are already struggling with rising household costs and now they face the prospect of a double whammy from the carbon tax and looming interest rate rises.”

Responding to a Newspoll survey in The Australian yesterday, which showed Labor's primary vote at 33 per cent and her own satisfaction rating at a new low of 38 per cent, Ms Gillard conceded she had “a lot of hard work to do as Prime Minister”.

Opposition Leader Tony Abbott, whose satisfaction rose six percentage points to 42 per cent in the past month, said the poll was “field evidence” of people's carbon tax concerns.

“I think it's the good sense, the common sense, of the worker which is coming to the fore here,” Mr Abbott said.

The Prime Minister seized on Newspoll's finding that 78 per cent of respondents believed climate change was real.

“What today's poll shows - and I don't normally comment on polls - but I'll say this if you look at today's poll it shows clearly that Australians believe climate change is real,” Ms Gillard said in Sydney.

“That's a pretty big contrast with Mr Abbott, who has said in the past it is absolute crap.”

She said she understood major reform made people anxious, but the public would soon have better information upon which to judge the plan.

“In the middle of this year we will be able to give everyone full details of how the carbon pricing system will work,” she said.

“They will be able to sit at their kitchen table and work out all of the dollars and cents for them.”

Treasury spokesman Joe Hockey said plummeting support for the carbon tax was “Labor's own handiwork”.

“The Australian people are smart,” he said.

“They look at a carbon tax and they say, yes, that means higher costs for me and everyday life. And the Australian people can see through the Labor Party. This is all of the Labor Party's making.”

theAustralian.com.au

Credits Trader: .Controversial climate sceptic Lord Monckton Set to Speak at National Press Club

CLIMATE sceptic Christopher Monckton has been offered a prime speaking slot at the National Press Club in Canberra on July 19, despite a spate of cancelled public appearances.

Lord Monckton - who recently accused Julia Gillard's climate adviser Ross Garnaut of “fascist” views - is set to debate the Australia's Institute's executive director, economist Richard Denniss.

Credits Trader: .Controversial climate sceptic Lord Monckton Set to Speak at National Press Club

Andrew Wilkie Sets out Conditions to Support Carbon Tax

JULIA Gillard can secure the final vote she needs to pass the carbon tax if she promises to protect a zinc mine in Hobart.

Tasmanian MP Andrew Wilkie last night met the Prime Minister to discuss his terms after she won support from the Greens and independents Rob Oakeshott and Tony Windsor for the package.

Mr Wilkie also wants to make Tasmania a renewable energy hub and guarantee compensation for low-income earners.

Should there be an election over carbon tax? Tell us below

Ms Gillard last night called premiers to postpone a planned meeting next week on health reform. It will allow her to go on a national tour to sell the carbon tax.

Government MPs and staff yesterday were briefed to be on a "war footing" for a major campaign after the package was unveiled on Sunday. The PM will make a televised address to the nation on Sunday night.

Ms Gillard said she would spend next week directly answering questions from the public.

"I will be wearing out my shoe leather, literally," she told Parliament.

Victorian Liberal Kelly O'Dwyer, from Higgins, challenged the PM to attend a town hall meeting in her electorate.http://www.blogger.com/img/blank.gif

Opposition Leader Tony Abbott said the PM was "running away from scrutiny" by refusing to announce it before Parliament began a five-week recess tomorrow.

He wrote to Ms Gillard and urged her to recall Parliament next week.

Liberal climate spokesman Greg Hunt said: "When it comes to cost of living, this will be Sunday bloody Sunday."

Source

Carbon Price Announcement on Sunday

AUSTRALIANS will learn how the proposed carbon tax will hit their back pockets when the federal government unveils its policy on pricing pollution on Sunday.

The announcement comes 136 days after Labor, the Australian Greens and two independent MPs first formed the Multi-Party Climate Change Committee (MPCCC) to investigate carbon pricing.

"This weekend the Gillard Government plans to announce a price on pollution as the central element of a comprehensive policy to tackle climate change, cut pollution and drive the transformation of the Australian economy to a clean energy future," Prime Minister Julia Gillard said in a statement on Monday.

"After hearing a report on the discussions of the Multi-Party Climate Change Committee, Cabinet agreed tonight that sufficient progress had been made to allow an announcement date to be set for Sunday 10 July 2011."

Ms Gillard said talks between MPCCC members during recent weeks had been fruitful.

The committee comprises Ms Gillard, Treasurer Wayne Swan, Climate Change Minister Greg Combet, Greens senators Bob Brown and Christine Milne, and independents Tony Windsor and Rob Oakeshott.

"While there will be additional discussions with the MPCCC this week, followed by further Cabinet consideration, it is expected that the remaining details will be finalised in these discussions ahead of Sunday's announcement," Ms Gillard said.

The scheme will start with a fixed price on carbon emissions on July 1, 2012, followed by an emissions trading scheme with a flexible price and an emissions target starting three years later.

The news comes after Ms Gillard revealed on Sunday that the carbon tax would not be placed on fuel for cars and light industrial vehicles.

The prime minister said Mr Windsor had been influential in that development, which blunts Opposition Leader Tony Abbott's argument that a carbon tax would increase petrol prices for motorists.

But Mr Abbott and other coalition MPs questioned the government in parliament on whether trucks, buses and boats would be exempt from the carbon tax, and how long the exemption would exist.

The impending announcement of the carbon policy was a great relief, Ms Milne said.

"Now at least we are in a position to be able to go out there and deliver on what we said we'd deliver at the time we signed the agreement with the Prime Minister Julia Gillard, saying we would have a multi-party climate committee, that it would deliver a carbon price mechanism and that the emissions trading scheme would begin on July 1, 2012," Ms Milne said.

But the Greens senator would not reveal any details about the carbon price.

Ms Gillard said last week nine out of 10 households would receive tax cuts or rises in benefits, and the three million lowest paid households would be over-compensated for increases in their cost of living due to the carbon tax.

Opposition Environment spokesman Greg Hunt said the government's announcement of its carbon price policy at the start of the five week winter break from parliament was a "cynical move".

"It is deliberately running away from the parliament and it is deliberately running away from scrutiny," he told AAP.

Mr Hunt said the government would not give the full impact on the costs of living up to 2020 on Sunday.

"The only thing that matters is the full impact on electricity prices, gas prices, on grocery prices, on general cost of living between now and 2020 because each year, every year the carbon tax is going to go up and up and up."

Commenting before Ms Gillard's announcement, Mr Abbott said a coalition government would finance its $10.5 billion carbon emission reduction scheme from Budget savings and not from an imposed tax.

READ ON

People's revolt looms on Australian carbon tax, Tony Abbott predicts

TONY Abbott has predicted a "people's revolt" over Julia Gillard's proposed carbon tax, saying the measure is a breach of faith with the Australian people and an assault on their standard of living.

The Prime Minister today announced Australia would have a carbon tax for three to five years before the introduction of a full emissions trading scheme.

But this afternoon Mr Abbott moved to suspend question time in parliament to censure Ms Gillard, saying she had broken a pre-election promise.

The Opposition leader said that under a $26-a-tonne carbon price, power bills would jump $300 a year and petrol prices would rise 6.5c a litre.

He said voters had believed Ms Gillard when she promised before the election that she would not introduce a carbon tax.

"Today's announcement is an utter betrayal of the Australia people," Mr Abbott said.

"We will fight this tax every second of every minute of every day of every of very month.

"I think there will be a people's revolt against this carbon tax and I don't think it will every happen because the Australian public will be so revolted by this breach of faith."

In a 2010 election-eve interview with The Australian, Ms Gillard said she would not introduce a carbon tax.

"I don't rule out the possibility of legislating a carbon pollution reduction scheme, a market-based mechanism,'' she said then. "I rule out a carbon tax.''

Moving the censure motion, Mr Abbott asked whether it was the “real Julia” who made the pledge in the first place.

“Nothing is more fake than making a promise to the Australian people before the election and breaking it after the election,” Mr Abbott said.

Ms Gillard said Mr Abbott only wanted to “wreck”, comparing him unfavourably to former prime minister John Howard.

"He wanted to be remembered for the things he created, not the things he destroyed,'' the prime minister said.

She said Australia could not be left behind as the world moved to a low-carbon future.

A price will be put on carbon from July next year under a framework agreed with the Greens and key independents.

The carbon price will apply to the energy sector, transport, industrial emissions and waste. It will not hit the agricultural sector.

Climate Change Minister Greg Combet today left the door open for fuel to be included in the cap-and-trade system.

"That is not a settled issue at this point in time, but it is an issue the committee will consider," he said.

Mr Combet said the committee would consider phasing in emissions trading for different sections of the economy.

A review one year before the end of the fixed price period would consider if there were any reasons to delay moving to a cap-and-trade scheme.

The starting carbon price, the length of the fixed period and assistance measures for affected individuals and firms are still to be determined.

The Prime Minister said Australia had to put a price on carbon because "history teaches us that the countries and economies that prosper are those that get in and shape and manage the change".

"I'm determined to price carbon," she told reporters. "The time is right and the time is now."

Ms Gillard predicted a tough fight ahead with Mr Abbott, saying he would wage a sustained fear campaign.

"Can I make it very clear that in the debate that will ensue I am not intending to take a backwards step," she said.

Ms Gillard made the announcement at Parliament House flanked by the Greens, Mr Combet and key independent MPs.

Greens deputy leader Christine Milne said the deal would not have occurred without the party's input.

"It's happening because we have shared power in Australia," she said.

"Majority governments would not have delivered this outcome. It is because the Greens are in balance of power working with the other parties to deliver not only the aspiration but the process to achieve it."

A climate change committee - comprising the government, Greens and independents Tony Windsor and Rob Oakeshott - has held four meetings since it was set up in September last year.

Ms Gillard said the government's emissions reduction target was unaltered at 5 per cent by 2020.

She said the system would not remain a simple carbon tax, as it was "hard wired" to shift to an emissions trading system.

Crossbenchers Mr Windsor and Mr Oakeshott will be crucial in securing a parliamentary agreement on a carbon price.

Mr Oakeshott endorsed the framework, declaring "I would vote for this tomorrow".

Mr Windsor was more circumspect, saying his support was not guaranteed.

"Please don't construe from my presence here that I will be supporting anything," he said.

He said there was "a whole range of unanswered questions" still to be answered.

Both independents welcomed the exclusion of agriculture from the framework agreement.

Australia to get carbon scheme by July 2012

Australia's minority Labor government has announced the country will have a carbon price by July 2012. The government has been working to reconstruct emissions trading policy after a dramatic failure under the former Labor prime minister, Kevin Rudd.

Some say the date is ambitious and leaves a multi-party parliamentary committee in a race against time to answer a list of hard questions. And the opposition has accused the prime minister of breaking a promise not impose such a tax.

MOTTRAM: Releasing a framework that sets the first of July next year as a date for setting a carbon price for Australia, Julia Gillard said now was the right time because the climate was changing as more people than ever produce more carbon than ever, but also because lingering would be bad for Australia's economy.

GILLARD: History teaches us that the countries and the economies who prosper at times of historic change are those who get in and shape and manage the change.

MOTTRAM: But a carbon price remains highly contentious in Australia. And Julia Gillard, who promised during last year's election campaign that there would not be a carbon price in this term of a Labor government, has had to work within the reality of being a minority government, courting Greens who will shortly have the balance of power in the senate, and independents who decide whether or not government measures get through parliament's lower house.

The political reality was in evidence as Ms Gillard made her announcement, flanked not only by her climate change minister, but two Greens senators and two of the lower house's four independent MPs who are part of a multi party committee that's working on how to price carbon. The Greens deputy leader, Christine Milne, made the political point.

MILNE: And it's happening because we have shared power in Australia. Majority governments would not have delivered this outcome, it is because the Greens are in balance of power working with the other parties to deliver not only the aspiration but the process to achieve it.

MOTTRAM: And with the opposition already calling it a breach of faith and an expensive one for consumers, it claims, the prime minister later conceded the point.

Politics aside, the framework sets a key goal, the July 2012 start date for a carbon price to establish an Australian market for tradeable carbon permits. It would be a two stage process. For the first three to five years, the carbon price will be fixed. Then it will shift to a flexible price, set by the market, pending a review of conditions, domestic and international, a year before that transition.

The committee says it gives business and industry what it wants now, certainty that there will be price on pollution where polluting is currently free.

But the framework is a long way from answering some key and very hard questions. Australia's climate change minister is Greg Combet.

COMBET: You will see that there has been no discussion to date of the starting price for the carbon price mechanism, or of the proposed household assistance measures that might obtain, or of the proposed measures for assisting industry for the transition to a clean energy future at this point in time. That is detailed work that of course we will have ahead of us in the weeks and months ahead. But nonetheless, the mechanism that has been outlined here is a very important step forward.

MOTTRAM: The mechanism also excludes agriculture and the status of transport is still under consideration. But one of the most contentious elements of former prime minister Kevin Rudd's failed attempt to introduce an emissions trading scheme will also likely dog this continuing negotiation - how much compensation should go to what are called emissions intensive, trade exposed industries - that is, big polluting companies like the coal fired power sector and the aluminium industry, which the Greens would want to see given as little help as possible.

Greens leader Bob Brown flagged his view.

BROWN: We are open to looking at the impact on the trade exposed industries but there is quite a deal of world experience in this now and we'll be looking at that experience because it doesn't back up some of the alarmist projections we've heard in the past.

MOTTRAM: Some of those alarmist projections included one that an emissions trading scheme would return Australians to the days of candles and horses and carts. The opposition leader, Tony Abbott, quickly flagged his continuing intense disagreement with a carbon price.

ABBOTT: We will fight this every second of every minute of every hour of every day of every week of every month. I don't believe it's going to happen because I think there will be a people's revolt - they will see this as an assault on their standard of living, which is exactly what it is.

MOTTRAM: So the government and its allies will be racing to embed a carbon trading scheme, aware that if they don't do so sooner rather than later, an election that delivered victory to Mr Abbott's side could see the scheme undone again. Ms Gillard can also anticipate a backlash from voters, if the claim that she's broken an election pledge not to have a carbon price takes hold.

Reporter: Linda Mottram, Canberra correspondent
Speakers: Julia Gillard, Australia prime minister; Christine Milne, deputy leader, Australian Greens Party; Greg Combet, Australian climate change minister; Bob Brown, leader, Australian Greens Party; Tony Abbott, Australian opposition leader

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EU to ban China, India carbon credits trade

Europe is to ban a highly lucrative trade in polluting rights obtained by European-based companies under a UN scheme to favour environmentally-friendly industrial investment in the likes of China or India.

The Kyoto Protocol's Clean Development Mechanism, an international tool in the fight to tame global warming, gives firms from industrialised countries incentives to invest in greenhouse gas reduction projects in developing countries, traditionally huge polluters.

In return, these investments generate rights to emit gases which are said to trade at 78 times the cost of destroying by-product gases, but the European Union will remove them from its Emissions Trading System registries as of May 1, 2013, the European Commission said Friday.

The ban requires the European Parliament's assent over the next three months.

"These projects raise concerns relating to their environmental integrity, value-for-money and geographical distribution," said the EU's climate action commissioner, Connie Hedegaard.

"Our aim is not to reduce the number of credits available but to ensure the international carbon market is based on a better quality and distribution of credits."

The ban will affect credits granted for destroying HFC-23 (a by-product of HFC-22) and N2O (nitrous oxide) gases, powerful greenhouse gases which contribute to climate change.

The commission partly wants to divert such investments to the world's least developed countries.

The EU executive said that "just 23 such industrial gas projects account for two-thirds of all the credits generated" through the CDM programme, leading to consistent accusations of major systemic abuse by powerful energy and industrial companies.

The vote comes a day after the theft of two million tonnes worth of polluting rights by hackers forced Brussels to close national carbon credits trading registries for at least seven days pending online security reinforcement.

Labor to launch carbon credit scheme for farmers

The Federal Government will today outline a plan to help farmers earn money for selling carbon credits on the international market.

It estimates the scheme could earn farmers up to $500 million over the next 10 years.

Climate Change Minister Penny Wong says the Government would set rules to determine what types of greenhouse gas abatement can be rewarded with carbon credits.

"The most obvious one is planting trees; reforestation has been a long-standing approach to trying to store carbon and there are a lot of opportunities in Australia," she said.

"But we want to develop a whole range of methodologies, we want to make sure that farmers can have the opportunity to look at soil carbon, to look at manure management."

The Government would also provide funds to Landcare so its volunteers can educate farmers on how to earn credits.

The initiative is expected to cost about $46 million.

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Politicians looking at big picture on ETS Carbon Trading Scheme

I have come to realise there are two types of reality - there is the real world, in which you and I struggle to survive each day, and then there is the world inhabited by politicians and the vast industry that feeds on them.

The latest manifestation of the dynamics of these two worlds is the emissions trading scheme. The ETS is seen by one world as another unwanted tax and by the other as an international obligation.

The Government has tried to downplay the effects of the ETS on households, but frankly I do not believe it.

I am sure the flow-on effect of fuel and power rises on businesses will add up to more than the $3.17 a week costs increase we have been told to expect.

The fact is the voting public feels aggrieved. Even though these voters do not have a viable alternative to turn to on this issue, this is hardly desirable for the Government.

The ill-feeling over one policy could spread to others, who knows?

Behind the dissatisfaction with the ETS is the uncertainty around climate change. Is it real, or not? The public doesn't know what to think.

Conditioned to respect science, most people accepted the initial reports of doom and gloom. But it now appears they were too gloomy and contained flaws.

That is the voters' world. But in the politicians' world it is different.

Internationally, the decisions have been made. Climate change is real and a way has been found to deal with it.

The ETS has been formulated and is locked in place. We can't back out.

We could have waited, as Australia has, but we are different from other countries.

We depend on trade to survive and we have taken a strong marketing stance based on being "100 per cent pure". We have to be seen to be acting as our customers would want us to.

To keep making money from our exports, which pay for our standard of living, we have to accept a little pain. That's the reality the politicians would have us accept. And it is the one I believe is right.

But some interesting new research has made me re-examine that belief.

The researchers asked people in British supermarkets about their purchases - specifically, whether their decisions were made on where the food item originated.

Then they went out into the high street and asked people if food miles - the distance food has to travel - would stop them buying New Zealand produce.

The results were fascinating.

Of the shoppers, only 5.6 per cent nominated country of origin as one of the reasons for purchasing an item and only 3.6 per cent indicated they had consciously chosen British products for the reason that such produce was "less harmful for the environment".

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Selling Carbon Credits - New Zealand Online Auction Site Trademe has Carbon Credits for sale

New Zealand has already implemented an ETS, now owners of forestry are selling carbon credits such as on this New Zealand Online Auction Site Trademe where one trader is offering Carbon Credits (750 NZUs) Starting at $15,000 New Zealand Dollars.

Currently the auction seems to be more questions about the specifics of the ETS as the world struggles to come to grips with its complexities.

View this trademe.co.nz Carbon Credits auction.