Australian Carbon Tax

posted on 2011-11-17

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After months of debate, Australia passed its controversial carbon tax legislation. The country’s intention to tax carbon emissions cleared its final barrier on 8 November, with the Senate voting 36 to 32 in favour of the tax.

From the 1st of July 2012, the country’s five hundred biggest polluters will face a carbon tax of A$23 (US$ 23.8) per tonne, which will be increased by 2.5 percent in real terms per annum for the next three years before being turned into an emissions trading system in 2015. This means that there will be no flexibility and no floating price until 2015. The scheme is likely to be linked with similar schemes which have been introduced in the EU and New Zealand.

The aim of the Australian carbon tax is to make firms more energy efficient and move power generation away from its current strong dependency on coal and towards gas and renewable energy. Supporters of the carbon tax think that the scheme could result in multi-billion dollar investments in new and cleaner energy sources.

Australia hopes that its carbon tax legislation will be used at the upcoming Durban climate change meeting to assist in developing a global binding agreement beyond the Kyoto period. In the meantime, other carbon-related legislation is being introduced worldwide such as the carbon scheme that the state of California will be introducing in 2013, the ongoing work on developing carbon trading programmes in China and South Korea, and South Africa's plan to introduce a carbon tax on its top polluters by 2012.

Once Australia's carbon law turns into an emissions trading scheme in 2015, polluters will be able to buy carbon offsets from projects overseas and, as such, developing countries could potentially benefit from the carbon scheme.

(Source: International Centre for Trade and Sustainable Development, 14th November 2011)