Government open-minded on carbon price

An emissions trading scheme (ETS), combined with an initial fixed carbon price, is one option to tackle climate change, the federal government says.

But Climate Change Minister Greg Combet says the government is being open-minded about the issue.

"There are options that provide the short-term benefits of a fixed carbon price with the long-term benefits of an emissions trading scheme," Mr Combet told the Investor Group on Climate Change Forum in Sydney on Friday.

"A cap and trade emissions scheme that begins with a fixed price for a particular period of time is one such option."

A fixed carbon price would provide certainty in the short term, he said. "It would allow businesses, the regulator, consumers and government to bed down the system before embracing a fully flexible emissions trading scheme."

A transition from the fixed price period to a fully flexible ETS with a market price for carbon could then happen some time in the future, "when, for example, we are closer to a binding international agreement", Mr Combet said.

Next year would be an important year for climate change policy, because Prime Minister Julia Gillard had announced that a carbon price would be legislated in 2011, he said.

"We'll consider what the options are for pricing carbon, what sort of mechanisms might be available and what are their relative merits, pros and cons."

The government's multi-party climate change committee will meet again next week.