Australia came close to introducing a carbon emissions trading scheme two decades ago before John Howard swept in to scuttle the plan.

The Howard government faced public pressure to mitigate the effects of climate change after agreeing to the Kyoto Protocol but refusing to ratify the international treaty.

In response, conservative ministers suggested an emissions trading scheme to put a price on carbon pollution.

Companies would receive allowances to account for their emissions, facing heavy fines if they did not adhere to the caps.

The scheme would align with Kyoto targets to limit emissions to no more than 108 per cent of 1990 emissions, according to cabinet documents from 2003 which were released on Monday.

The suggestion was presented in July 2003 by then-environment minister David Kemp, treasurer Peter Costello, foreign affairs minister Alexander Downer and acting resources minister Joe Hockey.

Mr Hockey would later be remembered for gutting the Australian Renewable Energy Agency, describing wind farms as “utterly offensive” and cutting hundreds of millions of dollars from a carbon capture and storage research program.

“The government has accepted that human-induced climate change represents a long-term risk for Australia,” the 2003 cabinet records read.

“An emissions trading system offers the ability to achieve the environmental outcome (emissions levels) with certainty.”

This was the preferred choice over a greenhouse levy as it would provide greater flexibility in an energy transition and was likely to have low or potentially no impact on the economy by 2010.

Though its costs would have been more heavily borne by some states including Queensland and Western Australia, “special treatment could ameliorate these costs and renewable energy generation, gas-fired electricity, forestry and services could tend to benefit”.

The ministers suggested withholding its introduction until 2012 “unless it was in the national interest”.

But on September 8, 2003, the cabinet decided not to go ahead with the scheme after Mr Howard met industry leaders.

They “expressed opposition to any government announcement of a disposition toward emissions trading as the preferred policy instrument for managing future emissions,” according to the cabinet papers.

Robert Hill, who was defence minister in 2003 after serving as environment minister from 1998 to 2001, said the prime minister would often re-mould policies written by others.

“John had had his own priorities which became a layer above (others) and I’ll never forget the series of meetings in which those issues were settled,” he told reporters in December 2023.

But he maintained “2003 showed a continuation of the determination to achieve the environmental outcomes we’d been working on over the previous six years”.

In following decades, environmental policy would become highly politicised and when Julia Gillard’s government imposed an emissions trading scheme similar to the 2003 proposal, it was labelled a carbon tax.

The scheme was dumped by then prime minister Tony Abbott after the coalition won the 2013 election.

AAP