Great minds can't think alike on carbon model

THE multi-party climate committee has failed to agree on a ''model'' for a carbon price despite both Labor and the Greens supporting a ''hybrid'' system of a carbon tax eventually leading to an emissions trading scheme.

The Gillard government has said it aims to legislate a new way of pricing carbon by the end of the year, but the slow progress of the committee will make that deadline difficult to achieve.

''The committee continued to discuss possible options for the broad architecture of a carbon price,'' a communique from yesterday's meeting said.

''Discussions are continuing on the broad architecture and therefore no agreed position can be released at this stage.''

Sources said there were no big disagreements at the meeting, but one independent, Tony Windsor, was unable to attend and another, Rob Oakeshott, has expressed reservations about the ''hybrid'' model, saying he would prefer to go straight to a full trading scheme.

''I question whether we need the transition period at all or whether we could start with a market-based system as quickly as possible,'' he said this week. ''The market is ready to rip, I'm of a view we should let it.''

Under the hybrid model the carbon price would initially be fixed, with an agreed annual rate of increase, then an emissions trading scheme would begin once an international climate agreement was reached and global carbon markets stabilised.

The federal cabinet has approved the preferred model, which was proposed by the Greens as a compromise after Kevin Rudd's emissions trading scheme was defeated in the Senate in 2009. It allows Labor and the Greens to start with a carbon price while deferring a decision on the deal-breaking point - what its ultimate ambition should be.

Areas of disagreement include the starting price and compensation to trade-exposed industries and electricity generators.

The government has said its industry compensation would be based on the work done for the Rudd scheme, but has not developed a final proposal.