Global momentum on carbon price as Australia legislates for tax

8 November 2011

MELBOURNE: Global momentum for a price on carbon gathered pace overnight with the passage of the Clean Energy Futures package through the Australian Senate - clearing the final legislative hurdle for a carbon price in Australia.

From July 2012, Australia’s 500 biggest greenhouse emitters are charged AUS$23 (US$23.50) for every ton of CO2 they release.

This fixed permit price will rise by 2.5% each year until July 2015, when it will switch to a floating price in an Emissions Trading Scheme. The price will then be determined by the market, within the range set by a price floor and ceiling.

“Amid the financial gloom it is good to see a country – and a carbon intensive one at that – put serious policies in place and recognize that the need to address climate change should not wait,” said Mark Kenber, CEO, The Climate Group. “Prime Minister Gillard has made it clear that putting a price on carbon is in the country’s economic interest. Combined with the adoption of the US’s first cap and trade legislation in California last month, Australia's new carbon tax demonstrates momentum for global action on climate change just weeks ahead of COP17 in Durban.” 

Complementary measures include the creation of the Clean Energy Finance Corporation, with $10 billion of funding to invest in renewable energy schemes and $9.2 billion allocated over three years for transitional industry assistance.

As a whole, the Clean Energy Future package is expected to cut Australian emissions by 160 million tons a year by 2020.

The money raised by the tax will be given back to households through tax cuts and pension increases, ensuring most people will benefit financially from the implementation of the legislation.

At a press conference today, Prime Minister Julia Gillard said: “Today’s vote does mean that we will commence creating our clean energy future with all of the jobs and opportunities that come with that future. [...] Today’s vote is a win for Australia’s children, it’s a win for those who will seek their fortune and make their way by having jobs in our clean energy sector. It’s a win for those who want our environment to be a cleaner environment and to see less carbon pollution."

Prime Minister Gillard concluded her statement with: "Today we have made history. After all of these years of debate and division our nation has got the job done and from the 1st of July we will see a price on carbon pollution.”

Caroline Bayliss, Australia Director, The Climate Group, said “It was heartening to hear the Prime Minister describe the opportunities presented by the legislation as heralding a ‘new industrial revolution’ – making it clear that Australia is forging ahead as part of the global Clean Revolution.”

Despite threats by the Opposition to repeal the carbon price should it be elected, an increasing number of analysts argue that a range of legal and political barriers will make this difficult.

“Already business leaders are calling for certainty and bipartisanship now that the legislation is in place.  Many of Australia’s largest companies are showing that they just want to get on with leading the transition to a low carbon economy – and that they are in this for the long haul,” continued Caroline Bayliss.

Following the Senate vote, the Businesses for a Clean Economy initiative publicly welcomed the implementation of the carbon price.  This coalition of more than 330 businesses and industry associations - including major companies such as Alstom, AGL, GE, Grocon, Fujitsu, HESTA Super, IKEA, Pacific Hydro, Pottinger and Unilever -  declared that: “Businesses are poised to invest and innovate and the carbon price package will support progressive businesses to start taking immediate action.”

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