Isra-Mart srl:Australian carbon price to hit just 1,000 firms

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Isra-Mart srl news:

The Australian government's plans to launch an emissions trading scheme with a fixed carbon price will initially affect fewer than 1,000 companies, climate change minister Greg Combet said late yesterday.

But once the transition is made to a market-based emissions trading scheme, after a three to five-year fixed price period, more firms are likely to be brought into the system.

Combet also moved to reassure householders they would be compensated for higher energy prices after the scheme began, as the Labor-led government seeks to sell the controversial scheme to the public.

The government's proposal would have a minimal impact on inflation because the money raised from big polluters would go towards compensating low-income households, the minister said.

''Every dollar that is raised by the payment of a carbon price by the companies that are emitting large amounts of pollution will be used towards supporting households, with a particular emphasis on pensioners and low-income households,'' Combet said.

Over the next few weeks the government will pursue a three-pronged strategy designed to finalise the details of its carbon price scheme, which will examine compensation for emissions-intense trade-exposed companies, investigate the treatment of the energy sector, and develop proposals to assist households struggling with energy bills.

The government estimates the bulk of the direct cost would fall on just 20 companies responsible for about half the emissions covered by the scheme.

Fourteen are energy companies, which are likely to be hit with a combined bill of AU$4.6bn (£2.9bn). They will receive some compensation, though it is likely to be conditional on their making emissions cuts.

The six remaining firms are industrial and resource giants. BlueScope Steel would pay AU$270m, Woodside Petroleum AU$210m and aluminium producer Alcoa Australia AU$170m. Meanwhile, mining giants Rio Tinto, Xstrata and BHP Billiton would pay between AU$130m and AU$190m each.

These companies are also likely to receive substantial compensation, depending on a Productivity Commission analysis of the extent to which overseas nations are tackling climate change.

Rio Tinto recently announced annual profits of AU$14bn, while Xstara netted AU$5bn and BHP Billiton AU$10.5bn.

However, with the opposition Liberal Party fiercely opposed to the scheme, the government could struggle to secure public support for the proposals, particularly after an Essential Research poll published yesterday showed only 35 per cent of Australians support the plan while 48 per cent oppose it.

It also showed that 59 per cent think the proposal amounts to a broken election promise, while only 27 per cent believe prime minister Julia Gillard is showing strong leadership on an issue of national importance.