Tony O'Kane | May 13, 2009

The Federal Government has announced that petrol is to be granted a reprieve from the impending emissions trading scheme, and won't be affected by it for three years after it kicks off. The news should certainly come as a relief to motorists worried that emissions trading would drive the cost of fuel up.

The introduction of the Carbon Pollution Reduction Scheme has already been deferred to 2011 (it was meant to begin next year), so having petrol exempt from the scheme until 2014 buys Aussie motorists some additional breathing space.

But is it the right thing to do? Implementing a carbon tax on fuel sooner rather than later would certainly be an unpopular decision, but if the government is to hit its ambitious target of a 25 percent reduction in overall carbon emissions by 2020, some hard decisions would surely have to be made.

While it doesn't account for the majority of this country's greenhouse gas production, the transport sector still produces around 13.5 percent of Australia's total carbon output - that's 76 million tonnes of the stuff.

Diesel produces more carbon dioxide per litre than petrol, but at this stage it appears that it will be largely insulated from price rises by the government's cent-for-cent tax adjustment, which will counter rises in the cost of fuel by lowering the excise by the same amount. LPG will be protected by the adjustment too, which will also last until 2014.

There were also fears that the treasury would seek to raise the excise on fuel to help generate additional revenue, but after last night's budget was announced it appears this isn't to be the case.

Highway smog

So, it appears Australian motorists will be free to enjoy their present level of fuel consumption without penalty. Will our reluctance to change our habits deliver yet another sucker-punch to Mother Nature when she's at her most vulnerable, or is the need to preserve our bank balances simply more important in these dark economic times?

The answer, at this stage, is largely academic. Fuel prices won't have any more taxes slapped on them for the next five years, so you may as well fill 'er up.

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