Australia has pledged to move forward with an extensive carbon trading scheme in 2010, despite concerns that it may not be sufficient in addressing global warming. The plan includes a target to reduce emissions by at least 5 percent of 2000 levels by 2020, with the possibility of increasing to 15 percent depending on international agreements. 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 amidst the global financial crisis, as Australia's economy is at risk due to climate change. If immediate action is not taken, we will suffer severe consequences. Key industries and jobs in Australia will be lost if we do not act now. The plan includes allowing prices to be determined by the market through auctions in the first half of 2010, rather than a fixed price as previously proposed. The government anticipates a price of around A$25 ($16.70) per tonne, which is lower than the European emission allowances currently trading at 15 euros (A$30) per tonne. Additionally, the government will impose a temporary price cap of A$40 per tonne to potentially restrict the market's growth initially, according to analysts. Brett Janissen, executive manager of the consultancy Asia-Pacific Emissions Trading Forum, compared the carbon scheme to a risky balancing act, with Australia allowing polluters to import carbon permits from overseas but not permitting exports. This decision may lead to participants seeking the cheapest prices. While scientists and green groups were hoping for cuts of at least 25 percent, the government's timing for implementing the carbon scheme is politically sensitive, as elections are approaching. Greenpeace climate campaigner John Hepburn criticized the scheme as a failure. The government predicts that the scheme will slightly reduce annual growth in gross national product and cause a one-off increase in inflation. Wong mentioned that carbon trading would cover most of Australia's carbon emissions, involving 1,000 of the largest companies in the country. However, major polluters would receive a large percentage of carbon permits for free. The LNG industry, previously excluded from the plan, 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 the Green paper was first outlined. She believes that the LNG industry plays a crucial role in helping Australia reduce its greenhouse gas emissions. Despite this progress, the targets set by Australia were considered cautious on a global scale. Europe has committed to a 20 percent reduction by 2020, while the IPCC has recommended that wealthy nations aim for reductions of 25 to 40 percent by then. Martijn Wilder, a partner at Baker & McKenzie in Sydney, expressed disappointment in the proposed scheme for not meeting the IPCC's recommended reduction levels. The scheme includes a A$40 price cap, which provides companies with certainty about compliance costs but also allows them to buy their way out of compliance if the carbon price exceeds $40. Janissen noted that the scheme has a gentle start but will become more stringent in reducing emissions after the 2012-2013 financial year. He also mentioned that the scheme appears to offer significant support to industries that are concerned about their emissions intensity, including subsidies for emissions-intensive and trade-exposed industries. In the program, companies that choose to participate will be required to give up a permit for each ton of carbon they release. It is anticipated that the sale of permits will generate A$11.5 billion in the fiscal year 2010/11, and this revenue will be allocated to offset the increased expenses for electricity and transportation for businesses and households. Australian farmers, who have been adversely impacted by a prolonged drought, will be exempt from participating in carbon trading for a minimum of five years. While agriculture makes up around 16 percent of Australia's emissions, the scheme will encompass transportation and fuel. In 2009, the government plans to present carbon-trading legislation to parliament. In order for the legislation to pass, the government will need the backing of the Greens and two independent senators, or they will have to contend with the conservative opposition, who are pushing for a delay in the implementation of the scheme because of the global economic downturn. ($1 equals A$1.49)