In a move that could presage the increasingly uphill battle for climate legislation around the globe, Australian Prime Minister Kevin Rudd announced yesterday that his country would delay the start of its emissions reduction scheme—the Carbon Pollution Reduction Scheme (CPRS)—by a year, until 2011. Citing the difficult global economic environment, as well as the need “to provide business certainty and investment certainty” to the sectors affected by the CPRS bill, the Prime Minister announced a number of additional measures to support jobs and businesses. A one-year fixed price phase will apply between July 1 2011 and June 30 2012, when carbon would be priced at $10/ton. A new “Global Recession Buffer” will offer greater protection, of approximately $2.2 billion, to emissions-intensive trade exposed industries. The expanded Renewable Energy Target (of 20% by 2020) will be in place as planned by 2010, and increased funding will be available for eligible businesses to undertake energy efficiency measures in 2009-10 as part of a $200 million tranche of the Climate Change Action Fund. Prime Minister Rudd also hinted at the potential of stricter emissions reductions commitments-up to 25% below 2000 levels by 2020—should international negotiations lead to an “ambitious global deal to stabilize levels of CO2 equivalent in the atmosphere.”

The center-left Labor Government will introduce these proposed changes into the Senate, but it seems unlikely to garner the support needed to pass through the Houses needed from the Greens and Liberal Party, who have each voiced strong opposition to the proposed scheme. The Greens, who want deeper cuts of around 25% by 2020, have already criticized the Government for what they characterize as further subsidizing “big polluters,” while the Liberal Party has advocated that the Senate defer consideration of the bill until next year after the Productivity Commission had studied alternative carbon market schemes.

This announcement by the Australian government shows the extent to which the global economic crisis has slowed the momentum toward adoption of a post-Kyoto climate regime.  Australia, in a possible preview of outcomes in the U.S. Congress, came down on the side of caution so as “to ensure we have a phase-in of the scheme to support jobs, [and] to enable the economy to recover.”

A similar fight has already commenced over the Waxman-Markey American Climate and Energy Security Act (ACESA), now being debated in the U.S. House of Representatives. Committee Democrats are sharply divided over how to prioritize the various major legislative initiatives they are interested in undertaking—and with support in the Senate considerably more precarious than support in the House, some sort of compromise measure seems likely.  One option currently receiving strong consideration would be to strip the energy and efficiency provisions from ACESA and pass those as a seperate initiative. Those provisions could mesh better with Senate priorities, as Senator Jeff Bingaman, chairman of the Energy and Natural Resources Committee, has been developing a comprehensive energy efficiency program of his own. Similar debates about the design of an emissions trading scheme will soon be heard around the globe, as countries try to enact comprehensive and rigorous climate change legislation in a challenging economic and political environment.

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