The collapsing US dollar is playing havoc with ETS projections. Governments that had been hoping to make extra revenue by selling carbon permits will now lose money, which means less cash available for subsidies to the developing countries.
That was exposed by this week’s Mid Year Economic and Fiscal Outlook from the Australian Treasury.
The CPRS was a $208 million benefit to the budget; now it’s a $1.2 billion cost over the forward estimates (to 2012-13). Over 10 years the net cost is now $2.5 billion.
In 2013-14, according to Treasury’s new forecasts, revenue from the sale of permits will total $12.1 billion and the cost of assistance measures will be $13.7 billion – a $1.6 billion budget hole.
The MYEFO says: “While world carbon prices have remained stable, the appreciation of the Australian dollar has resulted in the A$ carbon price estimate for 2012-13 falling from A$29 per tonne in the 2009-10 Budget to A$26 per tonne. A lower A$ carbon price assumption directly lowers the amount of revenue that is expected to be collected from the sale of CPRS permits.”