Funding reforms, deferrals and slashes as the Prime Minister moves to emissions trading

12 Jul 2013Archived News Climate Change Matters

Prime Minister Rudd announced his intention to move to emissions trading on 1 July 2014, effectively one year earlier. This is anticipated to cost the federal budget approximately $3.8 billion over four years. 

To reduce the impact on the budget “About $1.8 billion will be cut, deferred or returned to the budget from climate change and environmental programs1”. The Prime Minister indicated a range of measures including:

  • The Clean Technology Program to be reduced by $362 million:
    • return of $162 million from unallocated funding to the budget, and
    • re-phasing of $200 million within the Program.
  • $200 million will be deferred from carbon capture and storage funds and a further $24 million will be returned to the budget.
  • $213 million of unallocated funding from the Biodiversity Fund will be returned to the budget.
  • $143 million of unallocated funding from the Carbon Farming Futures program will be returned to the budget.
  • $186 million re-phasing of Coal Sector Jobs package allocation to align with lower carbon prices.
  • The Energy Security Fund will end two years ahead of legislated timelines resulting in $770 million returned to the budget.

What does this mean to business?

The move to the flexible price period will align the carbon price with international schemes. With current forecasts of $6-$10 AUD for carbon permits, businesses will have reduced costs for permits, electricity, gas and liquid fuels (noting that transport fuel is currently excluded from the scheme).

Businesses will have less funding available. For example the manufacturing sector will see support for clean technology investments reduced and the coal sector will have reduced funding from the Coal Sector Jobs package. Each sector will need to examine proposed changes closely to evaluate the impact.

Clearly the outcome of the upcoming election will provide greater certainty for businesses to progress investment decisions.

1 “Australia to move to a floating price on carbon pollution in 2014”, Office of Prime Minister, Treasurer, Minister for Climate Change, 16 July 2014.

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