Assuming the broadly unpopular intensity scheme for Generators doesn't proceed, the Coalition's proposed amendments to the Government's Carbon Pollution Reduction Scheme (CPRS) which gives more money to major polluters, creates up to an $18 billion deficit by 2020 with households most likely to pick up the tab, analysis by The Climate Institute reveals.

The Coalition proposals to give more handouts to major polluters plunges the cumulative balance of the scheme from an $11.5 billion surplus to an $18 billion deficit, under a 5% target out to 2020, assuming there is no change to the scheme generators operate in.

If householders had to meet this deficit in 2012, when the scheme starts in full, this would mean, on average, a $259 slug for low and middle income families.

"The CPRS is not a licence to print money-- if these increased handouts go to polluters already getting $17 to 22 billion under the CPRS, then either the householders get slugged or the fuel excise is substantially reduced," said The Climate Institute CEO John Connor.

Out to 2020 household support is worth almost $50 billion and the fuel excise offset is worth $27 billion.

"Giving millions more to polluters also robs future permit revenus that should be used to help achieve a global climate agreement and grow clean energy jobs and industries needed to secure our economic prosperity in a low-carbon world."

Australia adopting a stronger 15% reduction target would soften the impact but still leave the Coalition CPRS in the red to the tune of around $10 billion.

Under Government proposals supported by the Coalition, if Australia agrees to a 25% reduction target, which both parties agree is in Australia's national interest should other countries take comparable efforts, there would be an immediate review of Emissions Intensive Trade Exposed Industries (EITEI) assistance because such a target significantly reduces the need for any EITEI assistance.

"Critically, missing from the Coalition's calculations, and indeed the Government's, is money for international financing so crucial to achieving a global climate agreement.

The Climate Institute initial analysis (detailed spreadsheet available below) shows in March 2009 dollars:

• under 5% target to 2020 the Government's total surplus to 2020 is approximately $11.5 billion, with Coalition changes taking that to an approximately $18 billion deficit
• under 15% target to 2020 the Government's total surplus to 2020 is approximately $26.5 billion, with Coalition changes taking that to an approximately $10 billion deficit

"The Coalition's proposals need substantial changes and both the Government and the Coalition should move forward not backwards on the CPRS.

CPRS Fiscal Balance Detailed Spreadsheet