State leaders defy government

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Australian state and territory leaders have agreed to develop a national carbon emissions trading system (ETS), even though federal government refuses to cap CO2 pollution or sign the Kyoto Protocol. The initial proposal is for a system similar to the European Union ETS. A public consultation paper on the concept is due to be published later this year.

In essence, the system will set an overall cap on greenhouse gas emissions from industrial companies, which they can stay under by either reducing emissions or buying emission allowance permits from companies which have exceeded their reduction targets. Each tonne of permitted carbon dioxide can be sold as a carbon credit.

"In the absence of any national leadership on reducing greenhouse gases, the state and territory governments have moved to fill the breach and do it themselves," says South Australia premier Mike Rann. "Companies that find it expensive to reduce emissions can instead buy permits from companies that can reduce their emissions more cheaply."

Accusing the federal government of taking a "head in the sand" approach to climate change in its refusal to sign the Kyoto Protocol, Victoria's premier Steve Bracks adds: "A national trading scheme would create investment, drive the development of new technology and change attitudes to the emission of greenhouse gases." Bob Carr, premier of New South Wales, agrees: "Australia will, inevitably, have to play catch-up in this global market and the states and territories don't want to be left behind." Likewise Queensland's Peter Beattie says "a carbon trading scheme is in the national interest and has exciting potential for Queensland as an export earner."

The decision has been welcomed by the Australian wind energy association. It says the ETS will "provide greater opportunities for the renewable energy industry in the current market environment." The federal government is unconvinced. "Setting up an agreement to exchange carbon credits is no substitute for investing in technology," says environment minister Ian Campbell.

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