ABOUT $9 billion worth of government subsidies are flowing to the mining, gas and petroleum industries each year, directly contradicting government efforts to cut greenhouse emissions, a new report says.
The Australia Institute analysed tax breaks for fossil fuel use in recent budgets, including excise exemptions for the liquefied natural gas industry and fuel credits for aircraft and company cars. Its report says there is little point in putting a price on carbon emissions without first cutting incentives for using them.
''Proposing to introduce a carbon price while retaining existing fossil fuel subsidies is analogous to driving a car with the accelerator and the brake both pressed to the floor,'' said the report's authors, Richard Denniss and Andrew McIntosh, an economist at the Australian National University.
The Greens, who will hold the balance of power in the Senate when the government's carbon trading legislation is debated, have endorsed the findings and suggested some of the rebates and subsidies could be wound back as part of a climate change deal.
''At the moment energy policy and climate change policy are on a collision course, and as a result the government is massively subsidising these activities that are cutting across their climate change efforts,'' said the Greens senator Christine Milne.
Federal government data released this week shows that greenhouse emissions from the mining and gas-extraction industries are expected to rise more steeply than other sections of the economy in the next decade.
Australia's fugitive emissions - those which escape into the atmosphere as a resource is being taken from the ground and processed - will go up 69 million tonnes a year by 2020, 97 per cent more than in 2000, the data says. This reflects the ballooning number of new mining and gas projects approved in the past three years. Electricity production still accounts for the biggest share of Australia's net greenhouse output of about 582 million tonnes of carbon dioxide a year. Coal-fired and gas-driven power plants are responsible for 51 per cent of the nation's total emissions.
NSW saw a slight dip in its emissions from the energy sector in 2010, reflecting the fact that more of its power was sourced from interstate, and a generally mild winter meant fewer people relied on electricity to heat their homes.
The NSW Department of Environment and Climate Change said a shift towards gas power also played a part, with gas plants at Tallawarra, Uranquinty and Colongra producing more power.