The Garnaut Report explained

The ATA has published a guide to the main points of the Garnaut Report on an Emissions Trading Scheme from the point of view of the transport industry and the ATA’s own agenda.

Although the concepts being thrwon around at this point in the process are complex and, sometimes, vague, the reality of an Emissions trading Scheme will be with us before we know it. When it does kick in the difficulty for trucking folk will be the same as those created by the ever rising fuel prices, trying to pass the increase on to the customer.

As usual, the larger operators will be able to charge a full emissions levy, but further down the food chain it will get more and more awkward to get full compensation for more increased running costs.

The main points as outlined by the ATA of the report are:

• The report proposes that the Emissions Trading Scheme should include transport and petroleum products. This will allow abatement to occur in the enterprises and industries and regions in where it can be achieved at lowest cost.
• The report shares the ATA’s view that upstream acquittal would be appropriate for the transport sector reveals that for the transport sector, with petroleum logically covered by making the point of excise the point of obligation. Large liquid fuel users, for example freight operators, might be allowed to opt in to accept an obligation under the scheme.
• The report argues that the emissions price will fluctuate over time around a rising trend. The price will depend on the emissions limit set for the scheme, the demand for emissions intensive goods and services determined by income growth and the structure of the economy, the level of hoarding and lending of permits, international links and the costs of producing low-emissions substitutes.
• The report accepts there is a legitimate case for a fixed price for permits from 2010-2012 but concluded that it was a second best option to starting the scheme with unconstrained prices.
• The review recommended that the Building Australia Fund could be extended to cover energy infrastructure.
• Transport and urban planning infrastructure and services are not discussed in the draft report; it is intended they will be discussed in the supplementary draft and final report.
• The report proposed all revenue from the ETS should be returned to households and businesses. As a general guide: half to low income households, 30 per cent to emissions intensive trade exposed industries, 20 per cent to support research, development and commercialisation of technologies.
• The report discusses a new transport market – carbon dioxide for geo-sequestration. Carbon dioxide can be carried by trucks. The report states that carbon dioxide transport is relatively well developed as a technology. The issues associated with the provision of appropriate transport infrastructure will be discussed in the final report.
• The report argues that how and the extent to which the government compensates low income households will become an important issue in wage determination in response to higher consumer prices following the introduction of the scheme.
• The supplementary draft (released end of August) and final report (released end of September) will answer more questions: What is the review recommending about targets and trajectories for emissions reductions? What does the review think this will mean for carbon prices? What effect will this have on petrol and electricity prices? No speculation on these questions is made in the draft report.

The full Garnaut Climate Change Review Draft Report can be viewed here