Singapore (Platts)--12Aug2008

Australia plans to go ahead with carbon emissions trading proposals
despite debates on its effectiveness in the scientific community, prime
minister Kevin Rudd said in Singapore Tuesday.

Rudd--speaking at the 29th Singapore Lecture on Australia, Singapore, our
region and the world--said that he was convinced about the need for action to
cut greenhouse gas emissions despite the immediate economic costs as countries
would have to pay a heavier price for inaction.

The comments on economic costs--made at the Institute of Southeast Asian
Studies organized conference--assume significance as Australia's central bank
said Monday that the domestic economy was slowing significantly and cut its
growth forecast for 2008.

AFP quoted the Reserve Bank of Australia saying that it expected 2%
economic growth until December 2008, down from its previous forecast of 2.25%.

Separately, the emissions trading plan has also come under fire from
environmental groups who accused the government of shying away from the tough
decisions needed to fight the problem.

Under the so-called cap-and-trade scheme, the government sets an overall
limit on the amount of carbon the economy can produce and then provides
permits to industry up to the nominated amount.

Companies can then trade their permits, meaning carbon-intensive
industries will have to pay extra if they want to exceed their allocation, a
scheme the government believes will provide a market-based incentive to reduce
pollution.

The government also planned to include measures to offset the economic
impact on some politically sensitive areas in its early years.

For example, the government proposed a cut in petrol taxes so that
motorists already hit by high oil prices would not have to pay more to fill up
their cars. Low-income families facing higher electricity bills would also
receive subsidies.

Heavy polluters such as electricity generators and aluminum producers
would also receive free carbon permits, while the drought-hit agricultural
sector would be exempt from the scheme until 2015.

The Australian government has yet to release details of how it will set
pollution levels and set carbon prices ahead of the trading scheme's 2010
launch. The launch is part of a long-term goal to reduce emissions by 60% of
2000 levels by 2050 as part of the Kyoto Protocol.
--Elston Soares, elston_soares@platts.com