Fund to ease carbon cost

SMALL businesses and community organisations will have access to a $1.4 billion fund to help them cut their energy use and avoid the brunt of price increases to be caused by Australia’s emissions trading scheme.

The Climate Change Action Fund, available for five years, will be among the details of the emissions trading scheme to be launched in Canberra today.

The Climate Change Minister, Penny Wong, was to have launched the scheme but the Prime Minister, Kevin Rudd, will now do the honours.

The Government is expected to accept Ross Garnaut’s recommendation of an emissions cut of 10 per cent by 2020 but it will express it as a range of 5 to 15 per cent to preserve negotiating flexibility.

It is also expected to put forward the prospect of cutting emissions by 25 per cent by 2020 in the event that the world’s big polluters agree to take action.

The final target will be settled on in 2010, when the scheme is scheduled to start.

Unlike heavy industry, pensioners and low-income households, all of which will receive billions of dollars in compensation for increased costs, small business and community organisations will have no direct assistance.

Grants from the $1.4 billion fund could be used for such simple energy saving measures as insulation, more efficient lighting and energy-efficient hot water systems and other equipment.

Treasury has estimated the average household will spend an extra $4 to $5 a week on power and $2 a week on gas, for a combined increased energy cost of about $350 a year.

Compensation details for low-income households will be announced today and it is understood a periodical remittance, rather than direct subsidising of energy bills, will be recommended so that high bills still act as an incentive to use less energy.

The Australian Council of Social Services called yesterday for compensation to be indexed and for separate grants to help householders upgrade appliances.

Before today’s release, lobbying intensified from groups on both sides of the debate. Environmental groups called on the Government to adhere to the science and cut emissions hard while business and industry urged restraint in acknowledgement of the economic crisis.

In a separate gesture yesterday to the environment, the faltering economy and fears that cutting emissions would cost jobs, Mr Rudd said the Government’s $500 million renewable energy fund would be spent within the next 18 months, not across six years as originally planned.

Under the speeded-up scheme, $100 million will be available this financial year and $400 million for 2009-10.

“It’s good for jobs, it’s good for stimulus, it’s good for acting on climate change,” Mr Rudd said.

Professor Garnaut urged the Government to keep alive the possibility of a 25 per cut.

A 10 per cent cut is consistent with a carbon level in the atmosphere of 550 parts per million, risking permanent damaging effects. A cut of 25 per cent is the minimum required to stabilise carbon at about its present level of 450 parts per million.

“While the world is still a long way from an agreement that sets us on a path to stabilise emiss-ions at 450ppm, it is important that Australia keeps the possibility of such an agreement alive by saying that it is prepared to play its full proportionate part – a 25 per cent cut in emissions entitlements from 2000 levels by 2020 – if the world is able to go that far,” Professor Garnaut said.

The Climate Institute called for a 25 per cent cut but the Australian Chamber of Commerce and Industry said already weak business confidence risked being eroded further by proceeding with an ambitious scheme in hard economic times. It requested “realistic” emissions reductions targets and “extensive” industry compensation.

Greenpeace wants cuts of 40 per cent by 2020. Yesterday it said the Government would need to cut emissions by 50 per cent by 2015 to counter the extra pollution that will be caused by Friday’s infrastructure funding announcement that will double coal exports from Newcastle.