Environmental lawyers and their clients are waiting with bated breath for further details on the Gillard Government’s carbon pricing scheme. And while there is still a great deal of uncertainty around the proposal to introduce a fixed carbon price by 1 July next year, one thing is for certain: environmental lawyers will be hot demand. “If all the uncertainties around the proposal are resolved, and it passes into legislation there will be a lot of work for our clients in preparing for the scheme,” says Blake Dawson senior associate Jeff Lynn.

The government’s plan at the moment is for a fixed price period of three to five years before transitioning to an Emissions Trading Scheme (ETS). But this is subject to the government successfully negotiating an agreement, with both houses of parliament due to debate the legislation this year. “We have been speaking with clients about the announcement at a general level. As we came so close to a Carbon Pollution Reduction Scheme (CPRS) in 2009, businesses are taking a cautious approach,” said Lynn.

Most businesses have formed a view that an introduction of a carbon price in the short-to-medium term was a likely outcome according to Lynn and DLA Phillips Fox partner Charmian Barton. “I anticipate that as the Federal Government proposal becomes clearer, in terms of those sectors caught and the likely starting price, more businesses will be looking to see how they can reduce their carbon footprint to achieve costs savings,” said Barton.

One of the main concerns for legal practitioners is the lack of detail – a lack of detail on price, subsidies, exemptions, international linkages between Australia and other international arrangements and more.  Oz Minerals general counsel Francesca Lee told ALB that this lack of detail made it difficult to determine the business impact of the scheme.

However, some see logic what they have seen thus far: “I think the model makes sense. I can see how a transition from a set price model can work in theory,” said HopgoodGanim partner and head of climate change, Michele Muscillo.  However, Muscillo also has his concerns: “One of the interesting things is that the government said their reason for pushing this initiative is to provide business with certainty, but the major drawback with the current design is that at the end of the day the government can change the price at any time. This dilutes the benefit of getting a tax in hastily,” he said.

All legal professionals in the field agreed that the introduction of any price on carbon would impact on large emitters such as mining and energy, transport and manufacturing. “The stationary energy sector and other emissions intensive industries will be re-evaluating their contracts with customers to ensure they are able to pass through the cost of the carbon tax,” said Barton. There may also be issues arising around allocating responsibility for the payment of the tax, where this liability was not anticipated at the time the contract was entered into, which means an increase in work for commercial lawyers drafting contracts.

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