While MCA said it welcomed a more environmentally friendly future, chief executive Mitchell Hooke said today that a high quality emissions trading system would be "the most substantial economic reform of the Australian economy" and could not be digested overnight.

“We cannot underestimate the scale of the challenge for Australia in making substantial reductions in emissions in the short term," Hooke said.

“This is particularly the case until low emissions technologies are developed into commercial reality."

MCA said it "strongly" contested the Garnaut Review's embrace of uniform per capita emissions targets as a basis for a future global framework, saying it does not take into account differences in economies such as geography, resource endowment, composition of exports and economic and population growth rates.

In its submission to the Garnaut Review, MCA recommended that an emissions trading scheme that covers all greenhouse gases and a broad range of sectors be introduced, but that the transition to this should be measured in order to ensure a more sustainable long-term reduction in greenhouse gas emissions.

Some of the transitional measures recommended by MCA were:

• Taking a cautious approach to interim targets – emissions cuts of 30% on 1990 levels by 2020 will require cuts of around 44% on current projections;
• A gradual ramp-up in the carbon price signal – the expectation of higher carbon prices along with research and development will motivate a move to low emissions technologies;
• Establishing a price cap in the initial stages to guard against high prices beyond the industries' and economy's ability to adapt;
• The phased introduction of full auctioning of permits;
• Ensuring it does not compromise the competitiveness of emissions-intensive trade industries; and
• Gradual linking to emissions trading schemes in other countries ultimately leading to a global scheme.

Some other suggestions for facilitating a transition to a low emissions future included in the submission were:

• Devoting a share of revenue from emissions trading to help government, industry and researchers work together to develop low emission technologies;
• Making the mandatory 20% renewable energy target by 2020 a transitional strategy that will be expanded to be a clean energy target to include all low emissions technology; and
• Streamlining federal and state climate change policies to avoid repetition and contradiction.