The federal government will cut emissions without a carbon tax by finding the lowest cost options, Environment Minister Greg Hunt says.
Mr Hunt has unveiled the coalition’s plan for combating climate change with the Emissions Reduction Fund to be the main way it plans to cut emissions by five per cent by 2020.
“This is our positive plan to reduce emissions without a carbon tax,” he told reporters in Melbourne on Friday.
The $1.5 billion fund is a key part of the coalition government’s Direct Action Plan to cut emissions and address climate change after it abolishes Labor’s carbon-pricing scheme.
Mr Hunt said it will seek and find the lowest cost emissions reductions wherever they are.
They must also be genuine emission reductions and comply with international obligations, he said.
Mr Hunt says there will be credits for genuine emissions reductions, and the government will then buy the lowest cost abatement.
He says the purchasing mechanism will be market-based.
“It’s not a tax, it’s not a massive cost to families,” he said.
The mechanism will be funded until 2020 with initial allocations of $300 million, $500 million and $750 million over forward estimates, with the emissions reductions fund to begin next July.
Mr Hunt said businesses will not be punished for conducting business as usual.
“Instead of a system which penalises businesses for business as usual, which imposes a massive electricity tax, and massive electricity hike on families, this will take the pressure off businesses for their operations as usual and will take the pressure off families.
“But it will make sure that we have the capacity to deal with any rogue activities.”
The system will dramatically reduce emissions and meet Australia’s targets, he said.
It will work by creating forward contracts so there will be the security of a contract to allow businesses to invest in energy efficiency, he said.
There will also be a safeguarding of the system to ensure emissions are real and Australia is achieving its targets.
Mr Hunt said the coalition will continue in its bid to repeal the carbon tax, despite contrary efforts by Labor and Greens senators.
Under updated Australian abatement forecasts, Australia will have to achieve 431 million tons of emission reduction between 2014 and 2020, he said.
A white paper outlining the final design of the ERF will be released early in 2014.