Australia’s Clean Energy Bill 2011, passed late last year, became force of law on July 1st, making Australia the first large advanced economy outside of Europe to implement a carbon pricing policy (New Zealand has a carbon tax, but with a smaller economy not as heavily dependent on coal and fossil fuels). As of Sunday, the country’s largest polluters will pay a fixed price of A$23 ($23.55US) per metric ton (tonne) of CO2 emitted, more than double the current trading price of €8.15 (A$10) per tonne for Europe’s carbon trading scheme.
The initial price of A$23 per tonne will increase 2.5 percent per year until 2015, when the carbon tax morphs into a market-based cap-and-trade scheme allowing trading offsets and credits similar to Europe’s carbon trading plan. The program also comes with billions of dollars in “sweeteners” for business, including A$1.3 billion in aid to support jobs in the coal industry, A$300 million over four years for the steal industry, and A$70 million in grants to promote research into clean energy technology. Other sectors, like agriculture, are exempt from the tax. Low-income consumers will also receive tax rebates to offset any increase in energy prices.
As the world’s largest per-capita emitter of greenhouse gas emissions with an energy economy heavily reliant on coal, the Australian government led by Prime Minister Julia Gillard sees the tax as central in its efforts to reduce those emissions 5 percent by 2020 and a full 80 percent by 2050 over 2000 levels.
But one of the costs of the landmark legislation may be Gillard’s job, just as attempts to pass similar carbon pricing schemes did for her predecessor, Kevin Rudd. Gillard managed to pass her signature carbon tax with only a two-vote margin in the Australian Senate last fall. The highly contested law has polarized the country and emboldened her opposition. Characterizing the tax as driving “a wrecking ball” through the Australian economy, opponents vow to repeal the legislation if they gain power come the next election in two years.
Change is hard, and meaningful change often carries with it significant opposition. Hopefully Australia can remain on the right track as it starts down the path toward a competitive, sustainable energy economy.
Main image credit: Rybson/SXC freestock images
Secondary image credit: Takver/Flickr