AUSTRALIA – The Australian Federal Parliament has passed legislation for a carbon tax package that will force the country’s largest carbon producers –500 companies – to pay initial fees of A$23 per tonne of CO2 emitted.
Prime Minister Julia Gillard’s Labor party scored a narrow win in the House of Representatives in a 76 to 74 vote.
It is now likely that the carbon tax will be approved by the Senate next month and become law from 1 July 2012.
In her address to Coalition members prior to the vote, Gillard said, “We, on this side of parliament (Labor), will vote for a clean energy future, for reducing carbon pollution, for enabling economic growth without increases in carbon pollution and for putting more money in the hands of pensioners, working Australians who need it the most, people raising families.
“We will make sure, more importantly than almost anything else, that we seize the jobs and opportunities that come with a clean energy future.”
Australia, the world's biggest coal exporting nation, accounts for only around 1.5% of global emissions, but is the developed world's highest per capita polluter due to a reliance on coal for 80% of its electricity generation.
Aid to industry
According to Climate Change Minister Greg Combet, only the 500 biggest polluting companies would directly pay the tax, and households and industry would receive compensation for any flow-on price effects.
Export-exposed industries such as aluminium smelters and steel makers will receive up to 94.5% of carbon permits for free, while liquefied natural gas projects will receive effective assistance for 50% of emissions.
The scheme sets up a A$10 billion clean energy finance fund to leverage private investment in renewable energy. Legislation for the fund will be introduced in early 2012. The scheme also sets aside A$1.3 billion to help coal mines reduce emissions.
The plan also includes an additional A$300 million to help the steel industry, which is struggling with a high Australian dollar and higher costs for raw materials.
It will also allow the government to buy-back up to 2,000 megawatts of electricity from Australia's dirtiest coal-fired power stations by 2020, encouraging new investment in renewable energy and gas-fired power plants.
Agriculture is exempt from the carbon price, although farmers will be able to cash in on the market for carbon offsets.
The carbon plan sees Australia join the European Union and New Zealand with national emissions trading schemes, while the US and Japan have similar regional schemes.
Australia will begin talks next month with other countries to link Labor’s carbon pricing regime to global carbon markets. The government and the Greens party hope the carbon tax will reignite momentum for a global emissions reduction agreement at climate talks in Durban, South Africa, in December.
Australian Conservation Foundation chief executive Don Henry said the vote “is historic for the millions of Australians who, in the face of well-funded scare campaigns, have tirelessly urged successive Australian governments to take action on climate change.”
However, not everyone is happy about the passing of the carbon tax package. The Australian Chamber of Commerce and Industry released research from global economic and strategic consultant Castalia that claims energy-intensive small and medium enterprises were likely to suffer a cut in profitability of between 10-20%.
"The carbon tax will undermine the competitiveness of Australian coal mines with no reduction in the amount of global greenhouse gas emissions from coal mining," Australian Coal Association chairman John Pegler said.
The Australian Retailers Association (ARA) says 83% of its retail members expect consumers to spend less now that the carbon tax bill has been passed in the House of Representatives.
ARA chief Russell Zimmerman comments, “As the catchment point at the end of the supply chain, price impacts passed through this chain culminate at the retail checkout. This means every link in the supply chain – including manufacturing and rail, road or sea delivery – will pass on their cost increases as a result of the carbon tax to the next link. All of these costs compound on the way and fall straight into retailers’ laps for them to either absorb or pass on to consumers.”
“Retailers have tried to take measures to reduce their carbon footprint, Some have managed to take environmentally-friendly measures that have reduced their energy bills, only to find with the rising costs of utilities they’re now back to where they started in the first place.”