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Tony Abbbott. Picture: Getty Images.
Tony Abbbott. Picture: Getty Images.

Key WA business groups have warned the Abbott Government the centrepiece of its direct action strategy to combat climate change lacks certainty for industry without showing how it will be funded beyond 2016-17.

The Chamber of Commerce and Industry and the Chamber of Minerals and Energy have both urged the Government to provide more details on how its Emissions Reduction Fund will work.

The fund will contain $1.55 billion over three years for projects aimed at reducing emissions at the lowest cost to taxpayers. It is due to begin in July.

In a submission to the Government's consultations on the fund's design, CCI said the Government needed to give a clear indication about the money that would be available under the fund.

"Given that there are only funds allocated until 2016-17 for the ERF, there is no long-term certainty for industry," the submission said. The CME echoed that concern about future funding, saying some projects required longer time frames to get up and running but may not go ahead without assurances.

As part of the direct action policy, a baseline of emissions will be set for big polluters at their "business as usual" levels.

Companies that emit more than their baseline will be liable for a penalty, though the Government has ruled out slugging them to raise revenue.

WA-based Wesfarmers has told the Government companies that had already reduced their emissions should have this recognised.

Wesfarmers said it had made a "significant capital investment" in recent years that had reduced its emissions intensity 38 per cent.

"Many of these investment decisions were made on the basis of assumptions that no longer hold under proposed legislative changes," its submission said

"It is Wesfarmers' view that the ERF should be designed in a way that recognises businesses that have been proactive in reducing emissions in recent years and ensure such 'first movers' are not penalised for early adoption within their baselines."

The Australian Petroleum Production and Exploration Association said "business as usual" for the industry was significant growth and this needed to be reflected in the approach of how baselines were set.

Rio Tinto made a similar point that growth industries should not be disadvantaged.