The Carbon Pollution Reduction Scheme legislation was introduced into Parliament on Thursday May 14, 2009. This legislation includes new measures that were announced on May 4, which includes a delay of a year before firms must purchase permits. Below are some of the changes to the bill compared to the Exposure Draft Legislation.

The object of the act has been changed, with the addition of 4(a) to Section 3 of the legislation:

(4) The third object of this Act is: (a) if Australia is a party to a comprehensive international agreement that is capable of stabilising atmospheric concentrations of greenhouse gases at around 450 parts per million of carbon dioxide equivalence or lower—to take action directed towards meeting Australia’s target of reducing net greenhouse gas emissions to 25% below 2000 levels by 2020;

The government’s has announced policies (not in the bill) for what it would expect of developing and developed countries before agreeing to a 25% reduction:

The Government will adopt a 25 per cent target only as part of an ambitious international agreement involving comprehensive global action capable of stabilising greenhouse gases in the atmosphere at 450 ppm CO2-e or lower. Such a comprehensive and ambitious agreement must meet following conditions:
1. comprehensive coverage of gases, sources and sectors, with inclusion of forests (e.g. Reducing Emissions from Deforestation and forest Degradation – REDD) and the land sector (including soil carbon initiatives (e.g. bio char) if scientifically demonstrated) in the agreement;
2. a clear global trajectory, where the sum of all economies’ commitments is consistent with 450 ppm CO2-e or lower, and with a nominated early deadline year for peak global emissions no later than 2020;
3. advanced economy reductions, in aggregate, of at least 25 per cent below 1990 levels by 2020;
4. major developing economy commitments to slow growth and then reduce their absolute level of emissions over time, with a collective reduction of at least 20 per cent below business-as-usual by 2020 and a nominated peak year for individual major developing economies;
5. global action which mobilises greater financial resources, including from major developing economies, and results in fully functional global carbon markets.

There has also been a very minor modification to the sections of the legislation that deal with scheme caps and gateways (which describe how Australia will set its trajectory), with the addition of sub-sections 14 (7) (relating to the caps) and 15 (6) (relating to the gateways):

14 (7) If: (a) regulations are made for the purposes of this section; and (b) on a particular day (the tabling day), a copy of the regulations is tabled before a House of the Parliament under section 38 of the Legislative Instruments Act 2003; then, on or as soon as practicable after the tabling day, the Minister must cause to be tabled before that House a written statement setting out the Minister’s reasons for making the recommendation to the Governor-General about those regulations.

Subs-section 15 (6) is identical to 14 (7) except that it applies to a different section of the legislation. This changes are extremely minor and do not address the serious problems with this aspect of the legislation that I have raised before.

The most significant changes to the legislation relate to how the price cap (fixed price permits) will work, which is in Section 89 of the legislation. In the first year of operation, 2011-2012, the price of carbon will be set at $10 per tonne CO2-e — in this year the CPRS will function like a carbon tax; between 2012-2013 and 2015-2016, the government will issue fixed price permits that will initially be at $40, and increase by 5% above the CPI in subsequent years. As well as everything being shifted back by a year, the method in which the fixed price permits is set is slightly different. Previously, the price was set precisely in the legislation, and increased by 7.5% each year.