Yesterday Penny Wong released the government’s not-so-Green Paper outlining their intended emissions trading scheme (ETS), or so-called Carbon Pollution Reduction Scheme. The ETS is the mechanism the Rudd government wants to hang its hat on as the mark of their commitment to climate change action. Although the signs so far have not been promising – with the government slapping a means-test on the solar PV rebate since it came to power and distancing itself from the findings of the Garnaut review – the announcement yesterday was nonetheless a disappointing blow.

The sole test of an emissions trading scheme is whether or not it reduces greenhouse gas emissions. To do this, it must restrict polluters’ ability to pollute by making it prohibitively expensive for them to do so. A scheme that gives the biggest polluters free permits to emit carbon is inevitably destined to fail in this fundamental area.

The ETS announced by Penny Wong yesterday will allocate 20% of the total permits to be handed out for free to large polluters in trade-exposed industries, covering up to 90% of their emissions. The government also indicated that it will give direct financial assistance to coal-fired power stations, which are responsible for one third of Australia’s total greenhouse emissions. In addition, while transport will be included in the scheme, Wong announced yesterday that the fuel excise will be cut as necessary to ensure that the cost of petrol does not rise for at least the first 3 years.

What this amounts to is an ETS that’s holier than Swiss cheese. The government’s promise to funnel every cent of the revenue raised by the scheme into assistance for affected households and businesses appeases the loudest voices of complaint, but does nothing to ensure adequate investment in renewable technology and energy efficiency alternatives, which should be funded by the revenue from an ETS.

At this critical time we need to see the Rudd government initiating a transition away from fossil fuels to clean, renewable energy. When their Carbon Polluters’ Reward Scheme instead supports the very industries responsible for the worst greenhouse pollution, it raises the question of whether this government is at all serious about its promise to tackle climate change.

More information on the government’s scheme here.