Australia: The Carbon Pollution Reduction Scheme – Key Aspects Of The White Paper

Last Updated: 13 March 2009
Article by Caroline Law

Emissions Targets

On 15 December 2008 the Government released the Carbon Pollution Reduction Scheme ("the Scheme") White Paper and with it, Australia's carbon emissions targets post 2012.

The Government has set its commitment at between 5% and 15% below 2000 levels by 2020.

  • The 5% target is unconditional
  • The 15% target applies if all major economies commit to substantially restrain emissions, with advanced economies talking on reductions comparable to Australia.


  • The Scheme will have a very broad coverage including all six greenhouse gases under the Kyoto Protocol.
  • There are no changes to the sectors covered in the Green Paper, and thus the Scheme will cover emissions from stationary energy, transport, fugitive emissions, industrial processes, waste and forestry sectors. Forestry is to remain as opt-in, and the future inclusion of agriculture to be decided on in 2013, however the earliest inclusion date is 2015.
  • Less than 1,000 businesses are expected to have direct liabilities under the Scheme since emissions from facilities with total direct emissions less than 25,000 tones of CO2-e are not included.

Permit Allocation

  • Permits will be allocated through a combination of auctioning and free allocation to certain entities.
  • Allocation will progressively move towards 100% auctioning as the Scheme matures, subject to the provision of transitional assistance for emissions-intensive trade-exposed industries and coal-fired electricity generators.


  • Auctions for permits will be held 12 times throughout the financial year.
  • Entities receiving free permits will be able to sell these at auction occurring in 2010 and 2011.
  • The Government will advance auction future vintages. There will be consultation with industry on possible deferred payment arrangements for auctions of future vintage permits of a limited and strictly transitional nature; in particular, there will be no consideration of options involving the delivery of permits before final payment or without the payment of a deposit.
  • The first auction will take place as early as is feasible in 2010, before the commencement of the Scheme.

Assistance to Emissions-Intensive Trade-Exposed (EITE) Industries

  • EITE companies have lobbied hard for free permits since the release of the Green Paper, on the basis that their products are priced on international markets, and arguing that they cannot pass on carbon costs until their overseas competitors face similar imposts.
  • Proposals for free permits are more generous than previous (Green Paper) indications. Eligibility criteria will be easier to meet and will allow companies to opt to have emissions intensity (tonnes CO2-e/$m) judged on the basis of value added rather than revenue. These new criteria are expected to allow LNG and petroleum refining to now be eligible for free permits.
  • Aluminium, cement, lime and integrated steelmaking are expected to qualify for 90% free permits; and alumina, petroleum refining and LNG for 60% assistance. Other sectors that may qualify include pulp and paper, other iron and steel, chemicals, non-ferrous metals and glass.
  • Free permit allocation will decline by 1.3% p.a, to reach 79% (for 90% free permits) or 52.6% (for 60% free permits) by 2020-21.

Assistance to Coal-fired electricity generators

  • Assistance will be available to coal-fired generators with emissions intensity above 0.86 tonnes CO2-e/MWh while operating, or committed to be constructed, on 3 June 2007.
  • Provision of a fixed allocation of free permits (i.e. c.$3.9bn of assistance in nominal terms) to generators over five years.
  • Conditions to assistance include:
  1. The generator must maintain its generation capacity at 3 June 2007 levels. In order to reduce capacity, it must be shown that the reduction will not cause a supply shortfall.
  2. Following review in 2012-13, the final two years' permits will be withheld if a "windfall gain" looks likely for a particular generator.

Carbon Price

  • Australian Treasury modelling has shown that, based on cuts of 5-15% on 2000 levels, carbon prices will start at around $25/tonne in 2010.
  • A price cap will apply for the five years of trading, which has been set at $40, rising at 5% p.a. real.
  • Offsets: There will be an unlimited acceptance of Kyoto Protocol project-based carbon credits, such as those generated under the Clean Development Mechanism. However, there is no opportunities to generate offsets from domestic sources until after review in 2013.
  • Unlimited banking and limited borrowing from future years will be permitted.

Use of Revenue Raised

The Government projects that revenue from the Scheme will be in the region of $23.5bn over 2010-11 and 2011-12, assuming a carbon price of $25/tonne.

It is proposed that the revenue will be used as follows:

  • $9.9bn direct assistance to households
  • $4.3bn fuel tax adjustments to households and industry
  • $7.4bn free permits to strongly affected and EITE industry
  • $2.15bn Climate Change Action Fund to assist businesses, communities and regions.

The Climate Change Action Fund (CCAF)

  • The Government has established the CCAF under the White Paper to provide assistance to business, industry and communities making the transition to functioning under the Scheme.
  • The CCAF has four streams:
  1. Information dissemination to businesses about the CPRS, its impacts and measures to reduce carbon footprints;
  2. Investment and innovation assistance to assist businesses improve energy efficiency and reduce emissions;
  3. Structural assistance to smooth adjustment transitions; and
  4. Assistance for coal mining involving the promotion of emissions abatement and specific transitional assistance.
  • The CCAF will be rolled out prior to trading commencement.

Proposed Timetable towards Trading Commencement

  • Exposure draft legislation for the CPRS is expected to be released in late February 2009.
  • Following public comment on the exposure draft, which ends in April 2009, the Government intends to introduce the relevant bills to Parliament in May 2009.
  • Following successful passage of the legislation, the Scheme is expected to commence on 1 July 2010.

COP-15: Climate Change Conference in Copenhagen The parties to the United Nations Framework Convention on Climate Change will meet in Copenhagen in December 2009 to negotiate the successor to the Kyoto Protocol. It is hoped that the parties will reach agreement on a "Copenhagen Protocol" which will set out climate change commitments for the period post 2012.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.