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Fed: 'Green tinge' to budget?

By Cathy Alexander
11 May 2009 4:20 PM

CANBERRA, May 11 AAP - There could be a "green tinge" to the federal budget as the government tries to ramp up the fight against climate change.

Prime Minister Kevin Rudd's decision to break his election promise and delay emissions trading has left him bereft of a major climate weapon.

Tough economic times mean there's little spare cash in the budget, but some serious infrastructure spending is expected.

Some of this could go to green projects such as energy efficiency for homes, renewable energy and public transport.

John Connor, chief executive of the Climate Institute, is plugging for a green boost.

"We remain hopeful there will be some more (money) in that," he told AAP.

And while the government has warned it will wield the budget axe, most insiders are not expecting climate funding to be cut.

"It would be dumb to strip away what is the key pivot point for a low-carbon economic recovery," Mr Connor said.

The government has made various promises on climate change, and observers will be combing through the budget papers to see if they've delivered.

Promises include:

* Free ceiling insulation for homes;

* $1,600 rebate for solar water heaters;

* Scrapping the means test on the rebate for solar panels;

* $500 million to be spent on renewable energy, fast;

* $500 million on cleaning up coal-fired power stations;

* A renewable energy target - 20 per cent of electricity from renewable sources by 2020 - to get started next year.

One promise that's running behind schedule is low-interest $10,000 loans to green up homes, through solar panels and low-energy appliances.

The scheme was supposed to start early this year and cover up to 200,000 homes.

It will now start on July 1 and cover 75,000 homes. The loans will be interest free for the first four years.

In addition, 360,000 households will get a free green report card. Assessors will pay households a visit and tell them how to reduce emissions, and which government rebates can be accessed.

Another way the government could pay to reduce household emissions, which might reassure voters that there's action on climate change, is to tie the extended first home owners grant scheme to low-emission measures.

Meanwhile, pushing back emissions trading by one year to 2011 will push back the scheme's revenue and compensation.

The government says the scheme will cut emissions by between five and 25 per cent by 2020, depending on what other countries do. The budget could give a clue as to what the government thinks is most likely.

As a sweetener to the scheme's delay, there will be $200 million in 2009/10 for businesses and community organisations to reduce their emissions. The money is for energy audits and energy-smart capital works.

There's also $50 million for a new energy fund, by which the government pays for capital works to cut energy use by business.

Businesses then pay the money back out of the savings made to their power bills.

This innovative scheme has pleased conservationists, although it may need more funding to make a difference.

More controversial is the government's idea to make households feel they're tackling climate change under the emissions trading scheme.

Green-minded households will cut their emissions by paying to install technology such as solar panels.

They'll then be expected to pay again, buying carbon permits for the emissions they've saved. They can effectively tear up those permits, ensuring no one else obtains the right to pump out those emissions. This lowers Australia's overall emissions.

It's a double financial hit for households. More details about the scheme could be announced in the budget.