Emissions trading scheme to boost prices in short term

Australia’s emissions trading scheme which is planned to start in 2010 should make energy more affordable in the long-term, but short-term price hikes could see the government facing an A$1.8 billion (US$1.76 billion) a year compensation bill. The Climate Institute report on energy affordability and emissions trading released on June 23 found that energy price rises could easily be offset through the auction of carbon permits, estimated to exceed 1% of GDP or about A$10 billion (US$9.76 billion). “For most Australians, the affordability of energy is likely to improve substantially over the coming years, notwithstanding the introduction of emissions trading and the associated increase in energy prices,” said the report. But it said that under a high carbon price scenario, and if world oil prices continued to rise, there would be deterioration in energy affordability in the short to medium term, especially among low-income families. Australia is responsible for about 1.2% of global carbon emissions, but remains one of the highest polluters per capita because of the nation’s reliance on coal and other fossil fuels. The report found that average families could face price increases of up to A$10 (US$9.76) a week for electricity, gas and petrol in the short term, but over time, energy affordability would rise as energy prices plateau, incomes rise and energy efficiency improves. (June 23/July 8, 2008)<BR>