Emissions Trading Scheme

Our future, how important is it to you? Global warming is effecting our environment and it is largely caused by increases in greenhouse gases in the atmosphere. By limiting these emissions broad based actions across many sectors of the global economy is taking place. One of these is the introduction of the Rudd Governments Emissions Trading Scheme Bill (ETS).

The purpose of the Emissions Trading Scheme (ETS) is to reduce greenhouse gas emissions.

It is a market tool and economic incentive taking a common form called a "cap and trade". This is where the government places a cap on the total amount of emissions and provides certain allowances or credits up to that set cap.

Corporations, which produce large amounts of emissions, buy credits from those companies which produce less. About approximately 1000, big polluting companies need to buy a permit also, for every tonne of green house gas that is produced. ETS is also referred to as the Carbon Pollution Reduction Scheme (CPRS). The objective of the cap is to reduce the emissions and overtime lowered to substantially reach the emissions reduction target.

The Emissions Trading Scheme (ETS) came about prior to the November 2007 Federal election, the then Opposition in cooperation with the Sate and Territory Governments commissioned a study into the economics of climate change and its impact in Australia with recommendations, known as the Garnaut review.

During the same time, the National Emissions Trading Taskforce was created which looked at the possibility of an Emissions Trading Scheme in Australia. As a result from the federal election the Kyoto Protocol was approved by the Federal Government, therefore the Emissions Trading scheme was available to be processed.

The Kyoto Protocol is a binding set of quantitative emissions targets for industrial countries with obligations under international law. By 2012, Australia has to meet a target of 108% of 1990 greenhouse gas emissions.

Emissions Trading Scheme (ETS) will negatively impact on companies which produces excessive amounts of emission because businesses will now have to implement new strategies on how to maximise production activities as emissions are capped which forces declining in production. Companies can buy credits from those businesses that have produced less emission to cover the needed emissions but this will be costly and the company will generate new costs of expenditure which needs to balance with generating income. The ETS will greatly effect how some businesses run especially industrial.

How ever, the positive impact in the reduction of emissions will improve the pollution in the air leaving a healthier environment for future generations.

A growing debate has been accumulating between two climate change policy instruments. These are the Emissions Trading Scheme (ETS) and Carbon