Australia has pledged to move forward with a comprehensive carbon trading scheme in 2010, despite concerns that it may not be enough to effectively address global warming. The plan includes targets 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. The policy aims to mitigate the economic impact of the scheme in light of the global financial crisis, as Australia's economy, food production, agriculture, and water supplies are at risk. If we do not take action immediately, we will face severe and rapid consequences such as the loss of key industries and Australian jobs. The new plan involves allowing market forces to determine prices through auctions in the first half of 2010, instead of sticking to a fixed price. The government anticipates a price of around A$25 ($16.70) per tonne, which is lower than the current European emission allowance trading price of about 15 euros (A$30) per tonne. Additionally, the government plans to implement a temporary price cap of A$40 per tonne, a measure that analysts believe could initially restrict the market's growth. Brett Janissen, executive manager of the consultancy Asia-Pacific Emissions Trading Forum, compared the carbon scheme to a precarious balancing act, with one foot on the brake and one foot on the accelerator. He expressed doubts about the effectiveness of allowing polluters to import carbon permits from overseas while prohibiting exports from Australia. This decision could lead to participants choosing the cheapest option, rather than making meaningful cuts in emissions as desired by scientists and green groups. Critics, such as Greenpeace climate campaigner John Hepburn, have labeled the scheme a failure. The government, however, believes that the scheme will have minimal impact on economic growth, with a slight increase in inflation. Wong stated that carbon trading would account for 75 percent of Australia's carbon emissions and involve 1,000 of the nation's largest companies. However, major polluters would receive up to 90 percent of carbon permits for free. The rapidly expanding liquefied natural gas (LNG) industry, initially left out of an earlier plan, was happy to receive exemptions in the final version. Belinda Robinson, CEO of the Australian Petroleum Production and Exploration Association, noted the significant progress made since the model was first outlined in the Green paper. She expressed satisfaction on behalf of the LNG industry and believed that Australia should also be pleased, as the industry had the potential to help the world reduce greenhouse gas emissions. Despite this, the targets set were considered cautious compared to global standards. 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, stating that it falls short of the IPCC's recommended reduction levels. He noted that the A$40 price cap may provide companies with cost certainty but also allows them to buy their way out of compliance if the carbon price exceeds that limit. Janissen described the scheme as a gentle introduction with more stringent emission reduction targets expected after the 2012-2013 financial year. However, he noted that the scheme appears to offer significant protection for key industries concerned about their emissions intensity, including subsidies for emissions-intensive and trade-exposed industries. 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 the fiscal year 2010/11. This revenue will be used to provide compensation to businesses and households for increased costs of electricity and transportation. Australian farmers, who have endured an extended period of drought, will be exempt from participating in carbon trading for a minimum of five years. Agriculture contributes to around 16 percent of Australia's emissions, while the scheme will encompass transport and fuel. The government plans to bring carbon-trading legislation to parliament in 2009. In order for the laws to be passed, the government will require the backing of the Greens and two independent senators. However, the conservative opposition, who are concerned about the impact of the global economic downturn, may seek to delay the scheme. The exchange rate is currently $1 to A$1.49.