Carbon Pollution Reduction Scheme

The Carbon Pollution Reduction Scheme (or CPRS) was a cap-and-trade emissions trading scheme for anthropogenic greenhouse gases proposed by the Rudd government, as part of its climate change policy, which had been due to commence in Australia in 2010. It marked a major change in the energy policy of Australia. The policy began to be formulated in April 2007, when the federal Labor Party was in Opposition and the six Labor-controlled states commissioned an independent review on energy policy, the Garnaut Climate Change Review, which published a number of reports. After Labor won the 2007 federal election and formed government, it published a Green Paper on climate change for discussion and comment. The Federal Treasury then modelled some of the financial and economic impacts of the proposed CPRS scheme.

The Rudd government published a final White Paper on 15 December 2008, and announced that legislation was intended to take effect in July 2010; but the legislation for the CPRS (aka ETS) failed to gain the numbers in the Senate and was twice rejected creating a double dissolution election trigger. A bitter political debate within the Coalition Opposition saw Opposition leader Malcolm Turnbull lose the leadership to the anti-CPRS Tony Abbott. The Rudd government did not call an election and in April 2010, Rudd deferred plans for the CPRS.

After the 2010 federal election, the Gillard government was able to get the Carbon Pricing Mechanism passed into law as part of the Clean Energy Futures Package (CEF) in 2011, and became effective on 1 July 2012. However, after the 2013 federal election there was a change in government, and the Abbott government repealed the CEF package on 17 July 2014. Due to the great deal of policy uncertainty surrounding the scheme, organizations in Australia responded in a rather informal and tepid manner and largely withheld from making any large-scale investments in emissions reductions technology during the scheme's operation.

In the 2007 election year, both the Liberal-led Coalition government and the Labor opposition promised to introduce carbon trading. Opposition leader Rudd commissioned the Garnaut Climate Change Review on 30 April 2007, while Prime Minister John Howard announced his own plan for a carbon trading scheme on 4 June 2007, after the final report of the Prime Ministerial Task Group on Emissions Trading. Labor won the election on 24 November 2007.

The draft Garnaut Report, issued on 4 July 2008, was only one of many inputs into the policy-making process. The Labor government also issued a "Green Paper" on 16 July 2008 that described the intended design of the carbon trading scheme.

The Carbon Pollution Reduction Scheme, was a market-based approach to greenhouse gas pollution, to be implemented in 2010 (Department of Climate Change, 2008, 9). The main concern for the Australian government was getting the design of such a scheme correct, so that it would have complemented the integrated economic policy framework, and would have been consistent with the Government's commercial strategy (Department of Climate Change, 2008, 10).

The objective of the Carbon Pollution Reduction Scheme was to meet Australia's emissions reduction targets in the most flexible and cost-effective way; to support an effective global response to climate change; and to provide for transitional assistance for the most affected households and firms (Department of Climate Change, 2008, 14).

The basis of a Carbon Pollution Reduction Scheme was a cap and trade system, and was a way of limiting greenhouse gas pollution, as well as giving individuals and businesses incentives to reduce their emissions (Department of Climate Change, 2008, 11). The Australian Government would have set a cap on carbon emissions, consistent with longer-term goals of reducing Australia's emissions by 60% compared with 2000 levels by 2050 (Department of Climate Change, 2008, 11).