10 July 2011 – The  federal government released its carbon price package, The Strong Growth, Low Pollution report released on Sunday.

Following are key highlights:

Cost modelling
Modelling shows incomes and jobs will increase substantially while our country takes action to reduce the risks of dangerous climate change.

Average income per person under a carbon price is forecast to rise by about 16 per cent by 2020 to be around $9000 higher in today’s dollars.

National employment is projected to increase by 1.6 million jobs by the end of the decade.

The modelling also shows that the cost of living impacts of a $23 carbon price are modest, with an overall price increase of 0.7 per cent in 2012-13. That compares to a price increase of 2.5 per cent as a result of the GST.

The price of most goods will increase by less than one half of one per cent as the result of a carbon price. That is less than half a cent in every dollar.

Delaying action on climate change will only lead to dramatically higher costs, will undermine our competitiveness and will ultimately hit jobs and living standards.

Putting a price on carbon will drive innovation and investment in clean energy technology, moving production towards less pollution-intensive processes.

The report shows that without action Australia’s pollution is forecast to nearly double by 2050. A carbon price will deliver an absolute reduction in emissions and drive the expansion of the renewable energy sector so that it is 18 times larger than its current size.

This extensive modelling has been prepared by the Treasury in consultation with other departments over recent months, and will be updated to reflect the specific finalised policy agreed by the Multi-Party Climate Change Committee ahead of legislation being introduced into the Parliament. Any updated modelling is expected to closely match the results of the core policy scenario modelled in the Strong Growth, Low Pollution report.

Differences between the MPCCC agreement and the scenarios modelled include the starting price, availability of international permits, the binding 100 per cent facility allocation cap and the treatment of fuel.

The Clean Energy Finance Corporation will invest $10 billion in businesses seeking funds to get innovative clean energy proposals and technologies off the ground.

It will also invest in the transformation of existing manufacturing businesses to re-focus on meeting demand for inputs for these sectors, for example, manufacturing wind turbine blades and solar photo voltaic panels.

The Australian Renewable Energy Agency will independently administer $3.2 billion in existing Federal Government grants for research and development into renewable energy technologies and initiatives to bring them to market.

The Clean Technology Innovation Program will provide $200 million in grants to support business investment in renewable energy, low emissions technology and energy efficiency. This could support manufacturers to develop new clean technology products.

Innovation and renewable energy

Measures will include:

  • a $10 billion Clean Energy Finance Corporation
  • an Australian Renewable Energy Agency to manage $3.2 billion in funding
  • a $200 million Clean Technology Innovation Program.

Small businesses

Small businesses will not have to count or monitor their carbon pollution or electricity use. They will not have to fill in a single form as part of the carbon price reform.

While most small businesses will not be materially affected by the carbon price, we recognise the huge contribution small business makes to our economy, which is why we will extend the small business instant asset write-off threshold to $6500.

This will boost cash flow and help small businesses to grow and invest in assets, which may be more energy efficient.

The Government will also establish a $40 million program to provide information to small businesses and community organisations on practical measures they can take to reduce their energy costs.

Being able to get clear information from trusted sources is vital to small business. This program will be delivered through grants to industry associations and non-government organisations which have established relationships with small businesses and community organisations.

The Gillard Government will also provide additional funding to improve delivery of clean technology advice and other non-grant business support programs to small and medium businesses. These include the Supplier Advocates and Enterprise Connect.

Manufacturing

Jobs and Competitiveness Program to help ensure a smooth and manageable shift to a clean energy future for emissions-intensive, trade-exposed businesses such as steel, aluminium, cement and zinc.

This program is targeted at business activities which are emissions-intensive and trade-exposed – meaning they produce a lot of carbon pollution but are constrained in their ability to pass on costs because their prices are set in global markets.

Manufacturing activities which do not meet “emissions-intensity trade-exposed” thresholds under the Jobs and Competitiveness Program will be provided with other support during the move to a carbon price.

Our $1.2 billion Clean Technology Program will help improve energy efficiency in manufacturing and support research and development in low-pollution technologies.

The Clean Technology Program will provide support for manufacturers through the following three streams:

  • ·         $800 million Clean Technology Investment Program will provide grants to manufacturers to support investments in energy-efficient capital equipment and low-pollution technologies, processes and products.
  • ·         $200 million Clean Technology Food and Foundries Investment Program will provide businesses in the food processing, metal forging and foundry industries with grants for similar energy efficiency improvements ($150 million for food processors, $50 million for metal forging and foundries).
  • ·         $200 million Clean Technology Innovation Program to support business investment in research and development in the areas of renewable energy, low pollution technology and energy efficiency.

As the Clean Technology Program requires co-contributions from industry, this program will lead to $4 billion of investment to help Australian manufacturers transition to a clean energy economy and $400 million in research and development into low emissions technologies.

Further information in relation to the Government’s clean energy future and carbon price announcement is available at

Steel

A $300 million package to support jobs in Australian steel manufacturing.

This package comes in addition to the assistance for businesses within emissions-intensive trade-exposed industries under the Jobs and Competitiveness Program, also announced today.

The Steel Transformation Plan will be complemented by a small increase in free permit allocation for the steel industry from 2016-17 onwards.

Australian steel makers are currently facing considerable pressures from external factors other than a carbon price, including a high Australian dollar, increases in raw material costs and weak growth in the Australian construction industry.

Through the Steel Transformation Plan, the Gillard Labor Government will provide $300 million to encourage investment and innovation in the Australian steel manufacturing industry.

This will assist the sector to transform into an increasingly efficient and sustainable industry in a low-carbon economy.

As part of our package to support jobs, the steel industry will be eligible for 94.5 per cent assistance under the Jobs and Competitiveness Program to shield it from the full impact of a carbon price.

The Jobs and Competitiveness Program has been carefully designed by the Government to provide generous industry assistance measures for jobs and business to assist a smooth and manageable transition to a clean energy future. It will provide assistance of $9.2 billion over the first three years.

The Jobs and Competitiveness Program from 1 July 2012 will support businesses within emissions-intensive trade-exposed industries that face international competition from companies in countries yet to introduce comparable costs on carbon.

The Productivity Commission will review the treatment of the steel industry as part of the EITE assistance review in 2014-15, and three years’ notice will be provided of any changes to assistance arrangements consistent with the treatment of all EITE activities.

Local communities

New funding to assist communities and regions includes:

·         $200 million over seven years in assistance for strongly affected

regions and communities. This will include employment and training support, community development and economic diversification and a range of other activities.

·         An expansion of the Government’s Low Carbon Communities program to $330 million to improve the energy efficiency of council and community buildings and low-income households.

·         $40 million over five years for the Remote Indigenous Energy

Program to assist Indigenous communities access clean, affordable and reliable 24-hour power supply.

Households, communities and business

·         Energy efficiency information grants – the Government will provide $40 million in grants over the next four years to industry associations and non-government organisations to promote energy efficiency measures among small businesses and community groups.

·         Household advice line and website – the Government’s LivingGreener website (www.livinggreener.gov.au) will be expanded to provide information on how households can improve energy efficiency to save money.

·         Low Carbon Communities program – the Government’s Low Carbon Communities program will be expanded from $80 million to $330 million to improve the energy efficiency of council and community buildings and low-income households.

·         Clean Technology Investment Program – this program will provide grants to manufacturers totalling $800 million over seven years.

The grants will enable firms to invest in energy-efficient capital equipment and low-pollution technologies, processes and products.

The Prime Minister’s Task Group on Energy Efficiency

New programs:

·         Undertaking further policy work on a national energy saving initiative, or “white certificate” scheme. This scheme would place obligations on energy retailers to help their household and business customers find and implement energy savings.

·         Expanding the successful Energy Efficiency Opportunities program, which requires large energy users to find and publicly report on opportunities to save energy in their operations.

·         Improving the governance arrangements for energy efficiency so that opportunities to improve energy efficiency become nationally consistent, and it is clear to business and the community who they should speak to about energy efficiency.

·         Implementing mandatory CO2 standards for light vehicles.

Agricultural and land sectors

To be excluded from the carbon price, however, these sectors will still have opportunities to secure economic rewards under the Carbon Farming Initiative.

Farmers, forestry operators and other land managers will not pay a price for the carbon pollution from their activities.

Farmers, forestry and fisheries activities will not face a carbon price for their off-road use of fuel or their on-road use of light vehicles.

These grants will come from a pool of $150 million to be provided out of the $200 million Food and Foundries Investment Program.

The Government will open the way for farmers and land managers to harness new economic opportunities and gain new sources of income through the Carbon Farming Initiative.

Credits generated under the Carbon Farming Initiative and recognised for Australia’s international obligations under the Kyoto Protocol on climate change will be able to be sold to companies with liabilities under the carbon pricing mechanism.

This includes credits earned from activities such as reforestation, savanna fire management and reductions in pollution from livestock and fertiliser.

People on the land will have an opportunity to earn new streams of income and contribute to the national effort to tackle climate change. The Government will initially be investing around $1 billion in land sector measures over the next four years, to support the Carbon Farming

Initiative, reduce emissions and maximise the benefits of storing carbon in our landscape.

Funding is targeting emerging technologies and innovative management practices by engaging more scientists and independent experts to work on improving soil carbon, reducing emissions from livestock and crops, and enhancing sustainable agricultural practices.

Novel approaches, including biochar, biofuels and new crop and grazing species, will be targeted.

Funding is also available to assist agricultural industries and other organisations to test new ways of measuring, modelling and reporting on carbon pollution. This will help develop new methodologies for the Carbon Farming Initiative.

Under the carbon price package, there will also be a 15 per cent refundable tax offset for conservation tillage equipment for three years. This will improve soil carbon, water retention and productivity.

The investment of $429 million over six years into Carbon Farming Futures will significantly increase participation in the Carbon Farming Initiative and ensure land sector abatement remains based on the best scientific foundations.

Biodiversity Fund to protect Australia’s unique species from climate change impacts.

The ongoing fund will initially provide $946 million over six years for a range of projects to foster and preserve biodiversity around Australia.

The fund will support farmers, community groups and natural resource management bodies to take action on-ground that will protect biodiversity in the landscape.

It will support restoration and management of areas of the landscape which can store carbon while also achieving biodiversity outcomes including:

·         reforestation and revegetation in areas of high conservation value

·         management and protection of biodiverse ecosystems, including publicly owned native forests and land under conservation covenants or subject to land clearing restrictions

·         action to prevent the spread of invasive species across landscapes.

These measures will ensure the protection of Australia’s ecosystems and improve the resilience of Australia’s unique species to the impacts of climate change.

Biodiversity plays a crucial role in maintaining the productive capacity of our landscape and protecting our natural ecosystems.

Climate Change Authority

Former Reserve Bank Governor and former Treasury Secretary Bernie Fraser will be appointed chairman of the new Climate Change Authority.

One of the CCA’s responsibilities will be to make recommendations to the Government on future pollution caps under the carbon pricing mechanism.

Full details are available here www.cleanenergyfuture.gov.au