Australia carbon scheme needs re-think: analyst

The Treasury Department's modeling on emissions trade was too optimistic and its calculations shrouded in secrecy, the report prepared for parliament's fuel and energy committee said.

"While energy prices on global markets have fallen sharply in recent months, the longer-term projections do not seem to be in line with strong world growth assumptions adopted by Treasury," said report author Brian Fisher.

The report could help influence conservative and independent upper house senators, who wield the balance of power, to oppose the government's scheme when carbon-trade laws are brought to parliament later this year.

The center-left government has promised to cut greenhouse emissions by 5 to 15 percent by 2020 with the world's broadest carbon trading scheme, beginning in 2010, rejecting calls from businessmen for a delay due to global turmoil.

Fisher, a former head of official commodity forecaster The Australian Bureau of Agricultural and Resource Economics, said official assumptions of concerted international action were too optimistic ahead of testy world climate talks this year.

Officials had also underestimated the cost of the emission trading scheme on national GDP, as well as major energy firms, including coal-fired electricity generators, he said.

The government estimates the scheme will trim only 0.1 percent from gross national product growth from 2010 to 2050, with a one-off 1.1 percent inflation hit. (Reporting by Rob Taylor, editing by Sanjeev Miglani)