Scheme coverage
FACT SHEET 3
Download PDF
- Download Scheme coverage
(fs3.pdf - 59KB)
Documents are available for downloading as PDF files (PDF help).
The Carbon Pollution Reduction Scheme will cover a range of greenhouse gases emissions.
There are six greenhouse gases covered under the Kyoto Protocol which would be covered under the Carbon Pollution Reduction Scheme. Carbon pollution permits will be needed for all emissions that are covered by the scheme.
Maximal practical coverage
Broad coverage will increase opportunities for low-cost reductions in carbon pollution and ensure that the cost of achieving these reductions is shared equitably across the economy. Broad coverage will also ensure that competing firms and sectors operate within equivalent market rules. The overall cost to the Australian economy of reducing carbon pollution will be minimised with a scheme that has maximal practical coverage of greenhouse gas emissions.
Greenhouse gases
The Government proposes that all greenhouse gases included under the Kyoto Protocol - carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) - would be covered from scheme commencement.
Coverage across the economy
The Government proposes that emissions from stationary energy, transport, industrial processes, waste, and fugitive emissions from oil and gas production could be covered from scheme commencement.
The Government's preferred position on coverage would mean that the scheme includes around 75 per cent of Australia's emissions and applies obligations to around 1,000 entities.
As such, the great majority of Australia's 7.6 million registered businesses will not face new regulatory obligations as a result of the Carbon Pollution Reduction Scheme. The Government also proposes to include reforestation in the scheme from commencement on a voluntary basis. Reforestation differs from other activities covered by the scheme because growing forests are likely to sequester more carbon than they emit. Where other entities covered by the scheme would have to surrender permits for their emissions, forest owners could receive permits for net sequestration.
The Government does not consider that it is practical to include agriculture emissions in the trading scheme at commencement. Given the importance of broad coverage, the Government is disposed to include agriculture in the scheme no earlier than 2015. A final decision on coverage of agriculture emissions will be made in 2013 following consultation and work with the industry to identify practical methods for inclusion, and to develop reliable and cost-effective methods of emissions estimation and reporting. The Government also does not consider it practical to cover emissions from deforestation. Australia's deforestation emissions have reduced markedly since 1990, largely due to government restrictions on landclearing.
Point of obligation and thresholds
Imposing scheme obligations directly at the point where carbon pollution originates creates the clearest possible incentives to reduce emissions. However, it would be impractical to apply scheme obligations to all emitters. For example, in the transport sector there are many millions of cars that contribute to carbon pollution.
The Government proposes that, in general, scheme obligations would apply directly to large emitters - that is, to facilities that have direct emissions of 25,000 tonnes of carbon dioxide equivalent a year or more.
Where there are large numbers of small emitters, it would be more practical to cover emissions by applying scheme obligations at another point along the supply chain. For example, to cover emissions from fuel use, the Government proposes to apply scheme obligations 'upstream' on fuel suppliers.
July 2008
