Carbon Pollution Reduction Scheme

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The Carbon Pollution Reduction Scheme (CPRS) is an emissions trading scheme being introduced in Australia in 2010.



The structure of the CPRS is not yet finalised.

The only targets committed to by the government are:

  • a mid-century target of a 60 per cent reduction in Australia's carbon pollution on 2000 levels by 2050.
  • a Mandatory Renewable Energy Target (MRET) of 20% by 2020.


A Greenpaper with some information about the proposed scheme was released in mid 2008. However, the Greenpaper ignored the following two key recommendations of the Garnaut report:

  • The 60% reduction by 2050 is based on 10 year-old science. The latest science informs as that we are now in the midst of a climate emergency, and that we must achieve a 100% reduction by at least 2050. A better and safer target would be 100% by 2020.
  • The CPRS has already been compromised so that it won't reduce carbon emissions - it will only reallocate them. Granting free permits (20%) to the worst polluters, and removing excise on fossil fuel use were both specifically advised against by the Garnaut report, yet the government intends to proceed with this. Neither are acceptable.
  • The Government's most recent backflip on not specifying 2020 emissions cuts target until after global climate talks in Poland is another example of inaction and delay.

Treasury modelling

Add date & 4 scenarios


On the 15 of December the Government will release the White Paper on the design of the CPRS and the medium term target range for reducing Australia's carbon pollution.

Draft legislation

Draft legislation incorporating the policy approach outlined in the White Paper will be released in early 2009.

Misunderstandings about the scheme

There are major misunderstandings about how the scheme will actually work. Perhaps the most common misconception is that once the Government sets its 'target' for the level of greenhouse gas emissions, households will still be able to 'do their bit' to reduce emissions. In fact, once the CPRS commences in 2010, reductions in energy use by households will have absolutely no impact on Australia's greenhouse gas emissions.

Emissions trading will work like this:

  1. the first thing the government has to do is set its 'target' for how many tonnes of CO2 Australia will produce in a given year.
  2. Step 2 is to allocate 'permits' to emit that level of pollution, with the allocation taking the form of either a gift to polluters, an auction of permits, or a combination of both.
  3. Step 3 involves letting permit holders trade their permits with each other. The significance of the trading element of the scheme is that it enables polluters who would like to increase their emissions to buy permits from polluters who do not need as many permits as they thought.

Consider the following example. A family is disappointed with the emissions target set by the Rudd Government and decides to do 'their bit' to help reduce emissions further. So they install a solar hot water system on the roof, put insulation in their ceiling and leave the air conditioner off. As a result of these efforts the family reduces their electricity consumption by 20 per cent. At this point, the operation of the CPRS becomes counter-intuitive. As the family is using less energy, the power station that supplies their electricity will burn slightly less coal, which in turn means they need fewer pollution permits.

As a result of the family using less electricity and the power station burning less coal there are now some 'spare' emissions permits. The power station can sell these permits to the highest bidder, a cement kiln perhaps, thus allowing the kiln to increase its emissions and ensuring that there will be no net decrease in the level of emissions Australia-wide.

In other words, once the CPRS comes in, the efficiency 'savings' achieved by families will not be passed on to the environment in the form of lower emissions but will instead be captured by power stations and sold to other polluters.

This problem with the CPRS is spelled out in a recent paper published by The Australia Institute entitled Fixing the Floor in the ETS – read it here.

See also

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