Carbon pricing comes to Australia

By Gareth Renowden 11/07/2011


Australia will set a price on carbon from July next year, Aussie PM Julia Gillard announced yesterday. Cost per tonne will be set at A$23, rising 2.5% per annum, and the initial tax will morph into an emissions trading scheme from 2015. A full list of the key points and links to comment and reaction below the fold (as they used to say at the News Of The World)…

Key points of the Aussie carbon plan, from AAP via SMH:

  • Carbon price to start on July 1, 2012 starting at $23 a tonne rising at 2.5 per cent a year.
  • It will be paid by around 500 biggest polluters.
  • It will be replaced by an emissions trading from July 1, 2015.
  • Price ceiling and floor to apply when trading starts.
  • There will be two rounds of tax cuts and increases in allowances, payments and benefits.
  • The tax free threshold will almost triple to $18,200 from July 1, 2012, and then increase to $19,400 from July 1, 2015.
  • Every taxpayer with income below $80,000 to get tax cut from July 1, 2012.
  • Costs for the average household will rise by $9.90 a week.
  • Average household assistance, under the “clean energy supplement”, will be $10.10 a week.
  • $9.2 billion will be allocated over the first three years for industry assistance.
  • Most exposed industries such as steel, aluminium, zinc, pulp and paper makers will get free permits representing 94.5 per cent of industry average carbon costs.
  • $300 million has set aside help the steel industry move to a clean energy future.
  • $1.3 billion has been set aside for a Coal Sector Jobs Package, targeted at mines that are most affected by the carbon price.
  • A $10 billion Clean Energy Finance Corporation will be established to invest in new technology.
  • $3.2 billion has been allocated to the Australian Renewable Energy Agency.
  • Closure of 2000megawatts of dirtiest power generators by 2020
  • Agriculture is not subject to carbon price, farmers to benefit from carbon farming.
  • Small grants will be made for community-based energy efficiency programs.
  • Transport fuel excluded, but heavy transport to start paying carbon tax in 2014.
  • Climate Change Authority to advise on pollution caps and meeting emissions targets.

There’s a lot of good analysis and expert reaction at The Conversation. The Guardian puts the Aussie scheme into its international context (includes interesting stuff about India that I hadn’t picked up on), and the Herald reflects on the politics around the announcement.

There are obvious questions to be asked about how the Aussie scheme will impact NZ’s current Emissions Trading Scheme. Green Party co-leader Russell Norman argues that the higher price and support for renewables will put NZ businesses at a disadvantage by encouraging trans-Tasman competitors to move more aggressively on cutting carbon. Others might say that NZ’s price cap (at $12.50/tonne for the time being) puts NZ business at an advantage. NZ farmers will point to agriculture’s exclusion in Australia and the provisions for “carbon farming” as another reason for delaying their entry to the ETS. Plenty to discuss, in other words…