Australia eyes 1,000 polluters for carbon trading

About 1,000 of Australia's biggest polluting companies will need to buy permits under an emissions trading scheme (ETS) expected to be introduced in 2010 to try to reduce greenhouse gas emissions, the minister for climate change, Penny Wong said on Sunday.

Australia, highly dependent on coal for making electricity and generating hundreds of billions of dollars in annual export revenue, is scheduled to release a paper on Wednesday spelling out guidelines for how it intends to implement emissions trading.

"The government puts a limit on how much carbon pollution is permitted, we issue permits up to that limit for companies, and it is each of those permits which creates a price, therefore an incentive to reduce pollution," Wong said in an Australian Broadcasting Corp TV interview.

"We anticipate approximately . 1000 Australian companies will be required to take permits under this scheme. Obviously, we will focus primarily on the large polluters, Wong said.

Australia is home to some of the world's biggest mining companies and the world's single largest coal terminal.

Wong said the government of Prime Minister Kevin Rudd was committed to a 2010 start-up date for trading.

"We are very aware . that the longer you delay the higher the costs are likely to be."

Under the Australian model outlined earlier this month with much fanfare by the government, the scheme would cover more sectors of the economy than the European Union's emissions trading system.

The European Union scheme, which covers about half of the European Union's emissions, has been criticized in Australia for overallocating emission permits, which experts said should be auctioned instead.

Australia relies on coal to generate about 77 percent of the country's electricity.

Australia has stressed that its plan should not become a government revenue-raiser, suggesting 50 percent of the likely A$15-20 billion ($14-19 billion) raised from permit auctions should be returned to households and 30 percent to hard-hit businesses.

The other 20 percent would go to renewable energy.