Australia has pledged to move forward with an extensive carbon trading scheme in 2010, despite concerns that it may not be sufficient to address global warming. The plan includes a target to reduce emissions by 5 percent of 2000 levels by 2020, with a potential increase to 15 percent if international agreements are reached. Climate Change Minister Penny Wong emphasized the importance of the scheme for Australia, which has high greenhouse gas emissions due to its reliance on coal. Wong stated that the policy aims to mitigate the economic impact of the scheme in light of the global financial crisis, as Australia's economy is vulnerable to threats such as food production, agriculture, and water supplies. If we do not take action now, we will face severe and rapid consequences, including the loss of important industries and jobs in Australia. The current plan involves setting prices through market auctions starting in the first half of 2010, moving away from the previous idea of a fixed price. The government anticipates a price of approximately A$25 ($16.70) per tonne, which is lower than the European emission allowances trading at around 15 euros (A$30) per tonne. Additionally, the government plans to implement a temporary price cap of A$40 per tonne, a decision that experts believe may initially restrict market growth. Brett Janissen, executive manager of the consultancy Asia-Pacific Emissions Trading Forum, compared the carbon scheme to a risky balancing act and expressed doubts about its effectiveness. The scheme allows polluters to import carbon permits from green projects overseas but does not permit exports from Australia, resulting in participants choosing the cheapest option. Despite calls from scientists and green groups for at least a 25 percent reduction in emissions, the government is implementing the scheme at a politically sensitive time, just months before elections. Greenpeace climate campaigner John Hepburn criticized the scheme as a "total and utter failure." The government claims the scheme will slightly decrease annual GDP growth and temporarily increase inflation. Wong mentioned that carbon trading would account for 75 percent of Australia's carbon emissions and would involve 1,000 of the country's largest companies. However, companies with high pollution levels would receive up to 90 percent of carbon permits for free. The rapidly growing liquefied natural gas (LNG) industry, initially excluded from the plan in July, was happy to receive exemptions in the final version. Belinda Robinson, CEO of the Australian Petroleum Production and Exploration Association, stated that the plan had improved significantly since it was first outlined in the Green paper. She believes that Australia should be pleased with the inclusion of the LNG industry, as it represents the country's best opportunity to help reduce global greenhouse gas emissions. Despite this progress, the targets set by Australia were considered cautious compared to global standards. Europe has committed to reducing emissions by 20 percent by 2020, while the IPCC has suggested that wealthy nations should aim for reductions of 25 to 40 percent by that time. Martijn Wilder, a partner at Baker & McKenzie in Sydney, expressed disappointment in the proposed scheme for not meeting the IPCC's recommended reduction levels. He noted that the inclusion of a A$40 price cap could provide companies with cost certainty for compliance, but also allows them to buy their way out of meeting emissions targets if the carbon price exceeds the cap. Janissen characterized the scheme as a gentle introduction with stricter emission reduction goals expected after the 2012-2013 financial year. However, he acknowledged that the scheme appears to offer significant support to industries with high emissions intensity, such as subsidies for those exposed to international trade. Participating companies in the scheme will be required to give up a permit for each ton of carbon they emit. The auction of these permits is projected to generate A$11.5 billion in 2010/11, all of which will be allocated to offset the increased expenses for electricity and transportation for businesses and households. Australian farmers, who have endured over seven years of harsh drought, will be exempt from participating in carbon trading for a minimum of five years. Agriculture contributes to approximately 16 percent of Australia's emissions. However, transportation and fuel will still be incorporated into the program. The government plans to present carbon-trading legislation to parliament in 2009, requiring the backing of the Greens and two independent senators or the conservative opposition, who wish to postpone the scheme due to the worldwide economic slowdown. ($1 equals A$1.49).