Climate scheme would cost plenty



Fuel prices would skyrocket under new plans to tackle climate change. However, poorer families would be cushioned from the full impact. The government's climate change guru, Professor Ross Garnaut has called for transport to be included in an emissions trading scheme, setting the stage for fuel prices to spiral far beyond those caused by the current oil crunch.

The distinguished economist today released a draft report he prepared for the federal and state Governments on climate change and the introductions of emissions trading. Prof Garnaut said low-income families should be compensated for higher fuel and power costs when the scheme was introduced. He also said the Government should make payments to emissions-intensive industries which could lose jobs overseas if they had to cope with higher costs.

Under emissions trading, a cap will be placed on the amount of carbon which can be emitted into the atmosphere. Companies will be able to purchase and trade permits which allow them to emit carbon gases. Prof Garnaut said as many industries should be included in the scheme as possible, including transport. He said the money the Government earned from the scheme should be spent on compensating low-income households and business.

``The direct price effects of the emissions trading scheme will be regressive,'' Prof Garnaut said. ``The effects will fall heavily on low-income households, so the credibility, stability, efficiency and longevity of the scheme require the correction of these regressive effects by other measures.'' Prof Garnaut said the coal industry should be given support to reduce carbon emissions and to develop technology which buried carbon gasses under ground.

He said international cooperation on fighting climate change was essential. ``The weight of scientific evidence tells us that Australians are facing risks of damaging climate change,'' Prof Garnaut said. ``The risk can be substantially reduced by strong and early action by all major economies. ``Without that action, it is probable that Australians, over the 21st century and beyond, will experience disruption in their prosperity and enjoyment of life, and to long-standing patterns in their lives.''

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