Earlier this week, Climate Minister Greg Combet announced the government would scrap the $15 minimum price on carbon after 2015 and restrict access to much cheaper international carbon credits.

Combet said that linking the floor price of carbon permits with the European Union was the best move both economically and environmentally.

ACA chief executive Greg Sullivan welcomed the move, which could overcome administrative complexities, but said fundamental flaws in the overall scheme required continued amendment.

“Linking the floor price to carbon permits to that of Europe is a first step in amending the carbon pricing scheme,” Sullivan said.

“However, there is now a critical need for the Australian government to go further and address the fundamental flaws in the scheme in the lead up to price alignment with Europe.”

The ACA has outlined three flaws, including a high carbon price for the next three years, the targeting of fugitive emissions and the limit on carbon permits Australian firms can purchase internationally.

A price of $23 per tonne, compared to $9 a tonne in Europe, will be applied in Australia until 2015 and, unlike the European scheme, the tax will also apply to fugitive emissions.

Australian companies will also continue to be restricted to purchasing up to 50% of their permits internationally.

“The government must face the fact the carbon tax is imposing a significant cost burden on the Australian coal industry at a time when coal producers are facing steeply higher costs, tight margins and tougher international competition,” Sullivan said.

“Under the current scheme, Australian coal producers will be paying an estimated $15 billion in tax on fugitive emission over the next decade when our competitors have no such costs.

“Australia is discriminating against its own industry in a highly competitive international coal market.”