Carbon Pollution Reduction Scheme (CPRS)

The Australian Government has developed the architecture for an emissions trading scheme known as the Carbon Pollution Reduction Scheme (CPRS). Originally introduced into parliament during 2009 and slated for commencement in 2011, legislation for the Scheme has been rejected by the Senate.

The most recent position of the Government is to extend the implementation time for the introduction of the CPRS until the end of the current commitment period, which is 2012.

The Government still considers the CPRS to be the key domestic policy response to climate change and its intention is to reduce emissions of greenhouse gases through creating a price against these emissions. The aim is that in the year 2020, Australia will emit between 5-25% less greenhouse gas than it did in the year 2000.

The Scheme will require any company that owns an industrial facility (e.g. factory, power station, mine, gas processing plant, smelter) that emits more than 25,000 tonnes of greenhouse gases per year, to obtain permits for all of the greenhouse gases it emits. The available number of emissions permits will be strictly controlled. It is through controlling the number of permits that Australia will cap its greenhouse gas emissions.

Each year the business must surrender sufficient permits to cover their emissions. If they do not have enough permits to cover their emissions, they will be subject to penalties. The Government will control the total quantity of permits available in any year. This will be the cap on Australia’s greenhouse emissions.

As the Scheme rolls forward, fewer and fewer permits will be made available. The Federal Government’s draft legislation on the CPRS expressly includes forest carbon sinks as an eligible abatement activity. CPRS Permits created via reforestation projects will be bankable, tradable and extinguishable in exactly the same way as other Government issued permits.

For information on the CPRS visit the Department of Climate Change.