Australia's biggest polluters will have to cut their emissions but could find themselves making money doing so under a Labor government.
Labor’s climate policy, released on Monday, extends the coalition’s safeguard mechanism to set up a cap and trade system for industrial polluters.
“There will be no carbon tax, carbon pricing mechanism, or government revenue,” Opposition Leader Bill Shorten said.
The 250 biggest polluters must either cut their emissions or buy credits to offset any above a baseline level, and they would again be allowed to buy from international markets.
The government has attacked this aspect, with Prime Minister Scott Morrison saying it would force Australian business to spend money on “carbon credits for Kazakhstan”.
Opposition climate change spokesman Mark Butler disagreed, saying Australian companies were allowed to trade in every other kind of international market.
“What we need is cuts in pollution. Whether they are from the Australian carbon farming sector or overseas robust, credible markets or the electricity sector, the important thing is for cuts in pollution to be achieved,” he said.
But experts say it might be a moot point with Australian abatement among the cheapest globally, at about $15 a tonne.
“There’s an issue obviously in terms of whether … those who have a compliance obligation in Australia will even wish to go outside of Australia if they’re going to be paying a higher price than what they can source domestically,” Carbon Markets Institute deputy chair Elisa de Wit told AAP.
While it is not clear yet which international markets Australian companies would access, at the moment the spot price of carbon credits is about $25 a tonne in New Zealand, $21 in the US and $34 in the European Union.
The higher the price of having to buy credits, the more businesses will look at their own emissions, Ms de Wit said.
“If it’s cheaper to make changes within those business activities than it will be to purchase units then you would expect that is a business decision that will be made.”
As details are clarified about where the baselines are set and how and when they will reduce, businesses will be able to start planning to invest in domestic abatement schemes if they can’t directly cut pollution levels.
Labor also plans to allow companies who cut pollution below their baseline to sell credits to others, opening up another revenue stream.
Agriculture and electricity generators will be exempt from the scheme and a $300 million fund will help trade-exposed industries like steel, aluminium and cement manufacturing to remain internationally competitive.
Energy Minister Angus Taylor accused Labor of using the safeguard mechanism as “a Trojan horse for a carbon tax”.
But Mr Shorten said the cost of not taking action was bigger.
Labor says modelling shows that under both the coalition’s 26 per cent emissions reduction target and Labor’s 45 per cent target, the economy will grow about 23 per cent over the course of the 2020s.
Labor has also confirmed it will not use carbon credits from the earlier Kyoto climate deal to meet Australia’s targets under the Paris agreement.
The policy has received lukewarm endorsement from environmental groups, with most seeing it as a good first step but saying much more needs to be done.