The Australian government has said that a $9.4 billion assistance pledge it made to major businesses might have to be withdrawn if its plan to cut carbon emissions failed to get through in parliament this year.
Laws to set up carbon-trading from July 2011, which will require industries to pay for their emissions are before the parliament. The proposed legislation may be defeated or delayed in the Senate with the pro-business opposition enjoying the required support in the upper house.
Junior climate change minister Greg Combet said that any delay to the legislation would strain business certainty risking compensation for exporting, coal and electricity industries.
"Voting for this scheme means Australia is locking in certainty and guaranteed assistance for Australian industries. Delaying a vote would jeopardise that guarantee and remove certainty for industry," Combet said while speaking at a mining conference.
"If we have to go back to the drawing board, everyone involved will have to run the gauntlet of the political process, something we know cannot guarantee certainty."
The centre-left government's plans for cutting greenhouse gas emissions between 5 per cent to 25 per cent on 2000 levels by 2020 is a key initiative in its push to fight global warming.
Under the government's proposed scheme about 1,000 of the nation's biggest polluters who produce around 75 per cent of the nation's carbon emissions will require a permit for every metric ton of carbon pollution they produce.
The current plan guarantees around $12 billion by way of compensation to the polluters, with major emitters such as iron and steel and aluminium smelters getting 95 per cent permits free for the first year.
But prime minister Kevin Rudd is seven short of the required number of votes to get the plan through the Senate.
The impasse could be possibly be ended by adopting the US scheme but this has been opposed by critics who point out that is would not be in the national interest.
In the first place the opposition would not allow legislation that would introduce an emissions trading scheme (ETS) with the Obama administration's climate scheme no yet settled, they
It would also mean giving a free ride to big polluters, which would protect jobs but households could end up paying steeper bills, they point out.
Moreover the US target to cut greenhouse gas emissions is modest as compared to Australian aspirations, they add.
Lastly they say the Obama administration's ETS is still being worked out and is yet to pass Congress and worse parts of it just do not add up.