Carbon tax plans could cost $2bn: report Scrapping the carbon price could cost the Abbott government around $2 billion if companies decide to cash in millions of free permits handed to them under the scheme. New analysis from energy advisory firm RepuTex warns the government could be facing the hefty bill if companies rush to sell their free allocations before the carbon price is repealed and the permits become worthless. Under Labor's carbon pricing mechanism (CPM), brown coal generators and high emitting trade-exposed companies were allocated free permits to help them get used to carbon pricing. They could use those permits to pay for releasing CO2 emissions, or sell the excess ones back to the government. This financial year, 87 million free permits were distributed to these industries, and RepuTex predicts a similar amount will be released early in the next financial year. The coalition hopes to scrap the carbon tax sooner rather than later, but this could be easier said than done given the hostile make-up of the Senate until June 30. RepuTex head of research Bret Harper said if the coalition struck a deal with the new Senate in July next year, many companies looked set to cash in before the carbon tax was repealed. "They get their free permits up front, and they incur liability as the year proceeds," he told AAP. The earlier you put off that liability, the more excess permits you have available, resulting in a windfall. Mr Harper said companies were given free permits early in each financial year, and would still be liable to pay for pollution until the scheme was abolished. If that occurred at the start of October 2014, companies could rush to sell a glut of free permits back to the government before the repeal took effect, costing the coalition up to $2 billion. But if the repeal was delayed until April 2015, when companies would need their permits to pay for their carbon liability, RepuTex forecasts the damage would be considerably less at around $138 million. "If they're (coalition) worried about this giant budget impact that's looming, you'd think they would be motivated to strike a deal before the (financial) year starts," Mr Harper told AAP. Another option to avoid this could be for those permits to be integrated into the Direct Action plan, but this had not been explored by the coalition thus far, he said.