Australian government puts price on carbon

12 July 2011

The government of Australia has announced plans to tax carbon emissions by the country's worst polluters as part of major reforms to tackle pollution and move towards a clean energy future.


Australian prime minister Julia Gillard described the plans, which are due to enter force on 1 July 2012, as "incredibly simple". Around 500 of the country's biggest polluters will be required to pay a tax of A$23 ($24.38) per tonne of carbon dioxide equivalent. That price will remain fixed for three years, after which it will be superseded by an emissions trading scheme with a market-led pricing mechanism and a cap on the number of emissions permits available. The measures should avoid the emission of 160 million tonnes by 2020.

Over 50% of the revenue raised from the scheme will be used to fund tax cuts and benefits payments to help offset the cost increases businesses will inevitably pass on to householders. The remaining revenue will be used to "support jobs and competitiveness and build our new clean energy future," according to climate change minister Greg Combet. That clean energy future is likely to focus on renewable energy, with the government expecting the plan to drive A$100 billion of investment in renewables to 2050.


Nuclear power is not part of the current government's energy picture, despite an ongoing debate, but a carbon price would of course help to incentivise the technology to future leaders.

The package includes special measures to support some industrial sectors, including the steel industry and Australia's "most effective" coal mines. While the government says it will seek the closure of up to 2000 MWe of highly polluting coal fired generation capacity it will also offer assistance to some electricity generators to ensure security of supply.

Everyone's a winner?

Australia is home to 23% of the world's uranium reserves and produces around 9600 tonnes of uranium per year from its three operating uranium mines which is exported around the world: Australia has no nuclear power plants. It uses its vast reserves of cheaply available coal to generate around 75% of its electricity. The government says that putting a price on carbon will drive innovation and investment in clean technology, moving production towards less pollution-intensive processes.

According to a government report modelling the impacts of the changes, Australia's economy is expected to grow strongly at the same time as pollution is cut. Average income per person is forecast to rise by about 16% by 2020, while 1.6 million more jobs are projected to be generated. The cost of living is projected to rise by a "modest" 0.7% in the period 2012-2013 as a direct result of the A$23 carbon price.

The government's enthusiasm for its new policy is not shared throughout the country. Simon Bennison, chief executive of Australia's Association of Mining and Exploration Companies, said the carbon price combined with a reduction in rebates on diesel fuel effectively resulted in double taxation for the mining and exploration sectors. "There will be much pain for little environmental gain under the proposed carbon pricing regime," he said.

Bennison's words were echoed by Rio Tinto, owner of Energy Resources of Australia which operates the Ranger uranium mine. David Peever, Rio Tinto Australia managing director, said the tax was unfair on Australian exporters. "We are deeply concerned the proposed carbon tax fails to shield Australia's export sector and leaves it at a disadvantage compared to international competitors," he said.

Researched and written
by World Nuclear News