(The Epoch Times)
The Rudd government has unveiled details of its planned scheme - due to start operation on July 1, 2010, which includes a cut in the fuel excise to match an increase in the price of petrol caused by a carbon tax.
It would review the offset mechanism in 2013, a move that sent a poor signal to businesses and households, the Climate Institute said.
"Indeed this may leave people more exposed to global oil price shocks if they believe they will be protected in future," institute CEO John Connor said.
The money would be better used to improve the country's public transport and fuel efficiency schemes, he said.
The institute also is concerned there are no clear signals on investment in clean technologies.
Proposals to benchmark the performances of emissions-intensive trade-exposed industries were welcome, but the details would be crucial.
Plans to provide assistance to large energy generators - such as coal-fired power stations - would need to come under very close scrutiny, Mr Connor said.
The Total Environment Centre (TEC) said the green paper's scheme would dilute efforts to tackle global warming.
"There are some good elements but gaping holes that could severely damage the national effort on climate change," executive director Jeff Angel said.
"Polluting industries such as coal-fired power stations, energy-hungry smelters and land clearing get favoured treatment.
"This is a recipe for a scheme standing on weak legs."
Mr Angel said the federal government had fallen for a scare campaign run by the coal-fired power generating companies.
It was also surprising that planting trees would attract carbon credits, but cutting them down would not attract any penalty.
"We are also going to need a lot more from the government on energy efficiency and public transport," Mr Angel said.
The Australian Conservation Foundation (ACF) agreed that compensation for electricity generators would weaken the effectiveness of the carbon reduction scheme.
"Polluting industries that have spent the last decade doing little or nothing to prepare for a carbon-constrained economy should not get a golden handshake," ACF climate change program manager Tony Mohr said.
"The more compensation that goes to big polluters, the bigger the financial burden on the poor, the most vulnerable and rural Australians."
Mr Mohr said cutting the fuel excise would make little difference to family budgets and would mean the government had less money to invest in public transport and improving the efficiency of cars.
He agreed with the TEC on tree planting and clearing.
"The scheme's recognition of the greenhouse benefits of tree planting, but its failure to recognise the emissions generated by tree clearing, is unbalanced and disappointing," he said.
Mr Mohr said the government had squibbed by offering a petrol excise offset.
"What is disappointing is that the funds from the emission trading scheme have gone into an excise cut which won't make much of a difference," he told reporters in Canberra.
He called for funds to be spent on public transport instead of a cut in the excise.
"It's very disappointing to see that the government has chosen to ignore the recommendations of the Garnaut Review and give a golden handshake to electricity generators."
Key business group, the Australian Chamber of Commerce and Industry (ACCI), welcomed the paper's release, saying it gave more certainty in terms of planning.
But the sector was disappointed Treasury modelling of the scheme won't be available to business until October, it said.
"The critical aspects of that Treasury modelling will indeed be the economy-wide implications of an emissions trading scheme, and also the particular compliance cost(s)," ACCI's director of industry policy and economics Greg Evans told reporters in Canberra.
The scheme must be realistically phased in, have achievable targets, and also provide adequate compensation for business.
"If those factors aren't addressed then the overall adjustment task for businesses and consumers will be too severe," Mr Evans said.
Environmental group WWF Australia said all carbon permits should be auctioned to ensure the success of an emissions trading scheme.
The Rudd government will hand out about 20 per cent of its carbon permits to big polluting companies during the planned scheme's implementation period.
This will increase to 30 per cent once agriculture is included.
WWF chief executive Greg Bourne warned the tactic could see the whole trading scheme collapse.
"The big learning from the European emissions trading scheme ... was that because they gave them (permits) away they had a real problem with a collapse in the system," he told reporters in Canberra.
"The more permits that you give away free the more you find you are being lobbied by one group or another group - auctioning is by far the best way to go.
"The quicker we can go to 100 per cent auctioning the better."
