The future of Victoria's greenhouse emissions target is in doubt as the Brumby Government grapples with advice that its policies will make little difference to Australia's carbon reduction plans.
A leaked high-level report, obtained by The Age, reveals that a cabinet committee has discussed how the proposed federal scheme nullifies state targets.
Dropping state targets may be contained in a forthcoming policy paper.
Senior advisers have claimed the Victorian target, and a host of other state policies and programs, would become redundant under the Rudd Government's proposed Carbon Pollution Reduction Scheme.
Well-placed government insiders have confirmed that the Rudd scheme has thrown the state environment policy — including the question of emission targets — into turmoil.
The State Government's formal policy is to cut greenhouse emissions to 60pc below 2000 levels by 2050.
The target was expected to be part of climate change legislation to be introduced this year.
The Age yesterday revealed a high-level ministerial brief advised the State Government to rethink key environmental policies and programs, including subsidies for solar farms and solar panels and mandatory energy ratings for new homes, arguing that they will not contribute to any additional greenhouse gas cuts under the proposed federal scheme.
Senior sources say uncertainty over the future of Mr Rudd's scheme as it faces a hostile Senate has made the state legislation even more of a headache.
A policy paper, or green paper, preceding the bill was due in December, but is being reworked in light of the federal scheme and last month's bushfires.
Its release has been pushed back to "early 2009".
It is to be followed by a final policy paper, or white paper, in the middle of the year.
It is believed the green paper will now put greater weight on programs helping people adapt to climate threats, such as rising sea levels and more days of extreme bushfire conditions.
The State Government's predicament reflects a raging debate about the environmental benefits of voluntary actions to cut emissions.
Economists and environmentalists warn that, because of the design of the federal scheme, voluntary steps by those outside the scheme, such as householders, will only ease the pressure on big polluters to cut emissions.
This view is backed by the confidential Victorian ministerial brief.
Concerns about the role of voluntary action under the Rudd scheme are now surfacing at local government level.
Many councils have invested heavily in programs to cut emissions.
The City of Boroondara, in Melbourne's inner east, is finalising a policy of carbon neutrality.
Cr Heinz Kreutz said confusion and anger was growing over the role of household action under the Rudd scheme.
"It is very disappointing, because we are left in a very uncertain space," he said.
"We are encouraging people to install solar water and buy GreenPower.
"But trying to convince people it is still necessary or worthwhile is hard."
Cr Kreutz said the Rudd Government was sending mixed messages that local councils were left to try to interpret.
"We are talking about mums and dads here — not everyone is an expert.
"Kevin Rudd and Penny Wong are intelligent people. I can't help but think their obfuscation is deliberate," he said.
Climate Change Minister Penny Wong has denied that voluntary actions will be just a subsidy to big polluters, but has failed to answer a list of questions about voluntary action sent to her office on Friday.
The Greens attacked the leaked State Government advice, saying it would lead to the "worst possible outcome" of weak climate action at every level if state and local governments abandon their policies.
Greens senator Christine Milne called on the states to push the Federal Government to adopt a stronger target.
"If a target is hard enough, everyone will embrace action to help reach it. A weak target disempowers the whole of Australia, from householders to State Governments," she said.
Neither the State nor Federal government has responded to questions about the impact of the Rudd scheme on state policies.
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