Australia releases draft climate plan

The Ministry for the Environment of Australia has released its Emissions Reduction Fund Green Paper, which plans to introduce a carbon buy-back scheme (Emissions Reduction Fund) on the model of the UN Clean Development Mechanism, rather than setting up an emission trading scheme (ETS) or a carbon tax. Under the proposed ERF, which would extend from 1 July 2014 to 2020, the government will spend A$1.55bn (US$1.43bn) over the next three years and a further A$1bn later (US$925m) through reverse auctions to buy back the lowest-cost abatement. The lowest-cost abatement projects might be projects to clean up waste coal mine gas, clean up power stations or to capture landfill gas. Projects may be for improving energy efficiency in commercial buildings, replanting marginal lands, improving soil productivity or reforestation.

This new scheme leaves emission cuts with the government. Businesses will be encouraged to decrease emissions below their historical business-as-usual levels through the Emissions Reduction Fund. In addition, a mechanism will be developed in conjunction with businesses to provide incentives not to exceed historical emissions baselines. No more than 130 of the largest CO₂ emitters will be bound by this "safeguard mechanism". The safeguard mechanism could apply to facilities currently reporting information under the National Greenhouse and Energy Reporting Scheme and could commence from 1 July 2015 to provide sufficient time for consultation with businesses on baselines and the treatment of new market entrants. Australia plans to cut CO₂ emissions by 5% between 2014 and 2020 (about 431 MtCO₂).