Australia has committed to implementing a comprehensive carbon trade scheme in 2010, despite concerns that it may not be sufficient to effectively address global warming. The plan includes targets to reduce emissions by at least 5 percent of 2000 levels by 2020, with a potential increase 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, particularly in light of the global financial crisis, as the country's economy and key sectors such as food production, agriculture, and water supplies are at risk. If we do not take action immediately, we will suffer significant and rapid consequences. Our key industries and Australian jobs will be at risk. The new plan involves allowing market forces to determine prices through auctions starting in the first half of 2010, instead of a fixed price as previously suggested. The government anticipates a price of around A$25 ($16.70) per tonne, which is lower than European emission allowances currently trading at 15 euros (A$30) per tonne. However, the government will also implement a temporary price cap of A$40 per tonne, which analysts believe may initially restrict market growth. "It's like trying to have it both ways, with one foot on the brake and one foot on the accelerator, and I'm not sure if it will be effective," stated Brett Janissen, executive manager of the Asia-Pacific Emissions Trading Forum. The carbon scheme allows polluters to buy carbon permits from overseas green projects while preventing exports from Australia, giving participants access to the cheapest prices. Despite calls from scientists and environmental groups for at least a 25 percent reduction in emissions, the government is facing political pressure due to the upcoming elections in mid-2010. Greenpeace's John Hepburn deemed the scheme a failure, while the government predicts a minimal impact on economic growth and 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 country'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 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, acknowledged the progress made since the model was outlined in the Green Paper. She expressed satisfaction on behalf of the LNG industry and believed Australia should also be pleased, as the industry could help reduce global greenhouse gas emissions. Despite this, the targets set were considered cautious in comparison to global standards. Europe has committed to reducing emissions by 20 percent by 2020, while the IPCC has recommended that wealthy nations reduce emissions by 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 reductions. He noted that the A$40 price cap provides companies with certainty about compliance costs but also allows them to purchase their way out of compliance if the carbon price exceeds $40. Janissen described the scheme as a gentle introduction with stricter emission reduction targets beyond the 2012-2013 financial year. He also mentioned that the scheme appears to offer significant support to industries worried about their emissions intensity, including subsidies for emissions-intensive and trade-exposed industries. Participating companies will be required to trade permits for each ton of carbon emissions under the program. The sale of these permits is projected to generate A$11.5 billion in the 2010/11 fiscal year, with all proceeds being allocated towards offsetting increased expenses for electricity and transportation for businesses and households. Australian farmers, who have endured a lengthy period of drought, will be exempt from participating in carbon trading for a minimum of five years. Although agriculture contributes to approximately 16 percent of Australia's emissions, the scheme will encompass transportation and fuel. The government plans to bring carbon-trading legislation to parliament in 2009, and will require the backing of the Greens and two independent senators, or potentially the conservative opposition, who are in favor of postponing the scheme due to the global economic recession. The conversion rate is $1 to A$1.49.