KEY businesses have urged the Federal Government to adopt a system by which emission targets move up and down as part of a low carbon regime.
The Business Council of Australia wants a three-tiered system to determine credible carbon reduction targets for industry sectors that would not damage the economy and create investment certainty.
The BCA model for pollution targets was revealed on the eve of the Prime Ministerial Task Group on Emissions Trading handing down its report on the shape of a carbon credits market.
Westpac Bank's climate change chief Noel Purcell yesterday welcomed the BCA report, saying it was a positive step that showed the council had come a long way to addressing the need for carbon reduction .
However, he noted some business leaders would feel it did not go far enough in promoting investment in renewable energy as an interim measure to wind back emissions ahead of a carbon market being established.
The framework for the BCA's recommendations was devised by consulting firm Port Jackson Partners.
BCA president Michael Chaney said critical to an effective emissions trading scheme were long-term carbon reduction goals.
But Australia must first undertake extensive national economic modelling . .
. and develop a detailed knowledge of the likely climate change policies and targets of other countries, particularly those that we trade and compete with, Mr Chaney said.
FREE carbon permits to be issued to organisations at the start of a trading mechanism.
A TRADING scheme that can be linked globally.
A LONG-TERM scheme to operate for at least 30 years, and for yearly targets to be set covering a majority of sectors.
OFFSET the commercial impact on vulnerable industries for as long as necessary.
ESTABLISH a secondary market to provide hedging.
CAP the price of permits.
Australia needs three sets of targets, the report says.
The three-tier system would be adjusted up or down as circumstances changed over time.
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