Australia sets carbon tax to fight climate change

Carbon pollution to be taxed at USD 24.74 per tonne as country moves towards creating the region's biggest emissions trading scheme

PTI | July 11, 2011




Australia announced plans on Sunday to tax carbon pollution at USD 24.74 per tonne to help battle climate change, as it moved towards creating the region's biggest emissions trading scheme.

Prime minister Julia Gillard said there would be a fixed price on carbon pollution, blamed for global warming, from next year before an emissions trading scheme was introduced in 2015.

"We have had a long debate about climate change in this country," Gillard said in a rare televised address to the nation.

"Most Australians now agree our climate is changing, this is caused by carbon pollution, this has harmful effects on our environment and on the economy -- and the government should act."

"But we've now had the debate, 2011 is the year we decide that as a nation we want a clean energy future. Now is the time to move from words to deeds."

Under the scheme to begin on July 1, 2012, about 500 of Australia's top polluters will pay a fixed price, starting at Aus 23 per tonne, for their carbon dioxide emissions for the first three years.

The mechanism would then shift into an emissions trading scheme, with a floating price set by the market. The government will set a floor price and an upper limit for at least the first three years to avoid price shocks.

Experts said Australia's emissions trading scheme would be the biggest and most systematic outside Europe, similar to but larger in scale than that adopted by neighbouring New Zealand.

"There's nothing really systematic in the rest of our region," Professor John Quiggin from the University of Queensland's school of economics said.

"Obviously China and India are doing things of all kinds on a very large scale... so there's certainly very serious action there; but in terms of a broad-based and systematic carbon price, this is really one of the biggest moves we've seen," he told AFP.

Tony Wood, of the independent economics-focused think-tank the Grattan Institute at Melbourne University, agreed that Australia's planned scheme would be "the only other really significant one" outside Europe.

Gillard said the reform would create economic incentives for the biggest polluters to reduce their emissions of greenhouse gases.

 

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