The primary aim of any emissions trading system adopted by Australia should be to encourage investment in new and improved technology to reduce carbon dioxide releases to the atmosphere and to improve energy efficiency, according to the Australian Academy of Technological Sciences and Engineering (ATSE).

The scheme should be as simple and transparent as possible – with effective means for monitoring, reporting and ensuring compliance – and must minimise the role of speculators and financial intermediaries, ATSE says.

In a submission to the Task Group on Emissions Trading, established by the Prime Minister, ATSE says, in the event that a significant reduction in greenhouse gas emissions is adopted as government policy, it believes a portfolio of measures should be considered.

Any emissions trading scheme should apply initially only to major energy generators and users, with provision made for future expansion. Separate schemes could be developed for the transport, agriculture, retail and domestic sectors, where offsets for initiatives such as reforestation might be more appropriate.

To minimise economic impact, an emissions trading scheme should not impose cost imposts on energy generators or users already operating at world best practice levels.

The Academy does not believe coal, oil or gas producers should require permits for the carbon contained in their products – it is their customers who should be liable, as they are the emitters. Large-scale miners and producers should, however, require permits for their own energy generation and use.

Citing the current drive to make the community more aware of the need to conserve water, ATSE suggests some of the revenue generated in an emissions trading scheme should be used to fund a public education program on the need for energy conservation and to improve acceptance of and confidence in the emissions trading scheme itself.

It says any scheme must be stringent, yet technically realistic. Emissions allowed from, say, coal-fired power stations or energy consumption allowed in commercial buildings must be based on stretch targets representing what is technically feasible if world’s best practice were applied.

If the targets are set well beyond any current technical capability they then become a tax – a cost impost that no amount of engineering or operating capability can avoid. Aspirational goals (for example – greenhouse gas reduction of 50 per cent by 2050) should only be set after careful deliberation so that the targets established are rigorous, relative to current practice, but nevertheless realistically achievable.

ATSE says it would prefer to see Australian emitters invest in improving or replacing their technology or improving their practices locally, rather than using their capital to improve performance elsewhere, but recognises that global warming is a worldwide problem and ideally investment should be made where the greatest improvement for any given outlay will occur.