Commissioned by the federal Coalition and Independent Senator Nick Xenophon, Frontier said it used essentially the same modelling system employed by the Garnaut Review and the federal government in support of its CPRS proposals.
Under Frontier’s proposed changes, the CPRS would aim for a 10% reduction of emissions from 2000 levels by 2020, compared to the current 5% target of the Rudd government’s proposed CPRS.
Long championed by the Australian Coal Association, Frontier’s modification would allow the coal industry to be treated as an emissions-intensive trade-exposed industry (EITEI) in regards to fugitive emissions.
Frontier also recommends the auctioning of about 30% of the permits required by Australian industries, in line with the Waxman-Markey Bill in the US, as opposed to the current 70% proposed under the CPRS.
Other key recommendations involve allocating permits to electricity generators using a baseline approach, which is less aggressive than forcing them to purchase permits for all emissions, and the exclusion of agricultural emissions from the scheme.
Frontier has estimated its modifications to the scheme would cut the current value of its costs for the next 20 years from $121 billion to $72 billion.
The changes to the EITEI component of the CPRS has the economic consultancy forecasting less severe impacts for the regional areas of the Hunter Valley, central Queensland, Gippsland, Pilbara and the Kimberley.
The Coalition is unlikely to support the CPRS in its present form, with the legislation likely to be blocked in the upcoming Senate vote.
If the legislation is blocked one more time in the Senate within three months, the government will be able to call a double dissolution and therefore call an early federal election.
