Although Australia ranks as the sixteenth highest greenhouse gas emitting country on earth, it is an embarrassing 7th in per person metric tons of coal-fired plants.
Australia’s high emissions ranking has not been without its consequences. Already the driest inhabited continent in the world, Australia is extremely vulnerable to climate change .3 In fact, the southeastern region of the country just emerged from a prolonged drought from 1997 to 2011, widely known as the “Big Dry.”4 In an effort to cut back on GHGs and protect the country from further environmental devastation, the Aussie government has enacted the Clean Energy Plan. The plan specifies goals to reduce GHGs by 5% below year 2000 levels by the year 2020, and then further reduce emissions by 80% below 2000 levels by the year 2050.5
A carbon tax , which was implemented on July 1, 2012 as part of the pollution-reduction plan, requires companies that emit more than 25,000 metric tons of carbon dioxide (CO2) emissions in a year to pay up. Around 300 of the country’s bigger polluters will be forced to buy emissions permits and form the beginnings of a carbon market.6 When she unveiled the scheme last year, Prime Minister Julia Gillard predicted the tax would cut Australia’s emissions by 160 million metric tons by the end of the decade. That’s the equivalent of taking 45 million cars off the road!7
A carbon market generally reduces greenhouse gas emissions by two means. After the government sets the initial price for carbon, 1) companies that are impacted by the new costs will invest in cleaner technologies; and 2) customers will be charged more for energy, encouraging conservation among businesses and households. In order to assist customers, many billions of dollars raised by the carbon tax and other taxes will be used to help households and businesses (the smaller ones particularly) cope with rising energy costs.9
Mechanics of carbon pricing. 10
Between 2012 and 2013 the price for one metric ton of carbon will be $23. The government will continue to increase the price until July 1, 2015, at which time an emission-trading scheme, i.e. a carbon market , will initiate and price will be determined by the market.11
Table 1: Price of carbon 12
Financial Year | Price ($) |
| 2012-2013 | 23.00 |
| 2013-2014 | 24.15 |
| 2014-2015 | 25.40 |
| July 2015 onwards | Set by market |
Carbon Market Controversy
When Australia began its carbon trading program in July, it joined the ranks with several other countries and governments including New Zealand, the European Union, some states in the U.S., British Columbia, Canada, and Tokyo, Japan. Unfortunately, the new Australian program has received a great deal more criticism than the others in existence. In a recent commentary, Australian National University climate policy analyst Frank Jotzo wrote: “Australia’s carbon pricing mechanism might enter history as one of the best designed yet shortest-lived policies for climate change mitigation.”13
So, why is everyone so mad? Due to the current worldwide economic crisis, establishing a carbon market has been a contentious issue in Australia for several years. In 2009, Liberal leader Malcolm Turnbull was ousted from his party after backing the Carbon Pollution Reduction Scheme (CPRS) legislation.14 And just before her 2010 election, current Labor Party leader Julia Guillard assured supporters that “there will be no carbon tax under the government I lead.”15
On the first day of the carbon tax enactment, more than 1000 anti-carbon protesters gathered to demonstrate their unhappiness about Ms. Guillard’s retreat from her previous anti-carbon tax position. Reports of the protest describe demonstrators carrying signs asking “why tax the air we exhale?” Leaders from the Liberal Party addressed the crowds with promises to abolish the tax immediately if elected: “Every coalition member will sign a blood oath to get rid of this tax.”16
Surprisingly, it isn’t just radicals who oppose the law. According to a recent Nielsen survey, only 33 percent of Australians polled support the measure to tax carbon, and 62 percent of the 1,400 voters polled opposed it.17 The Australian Competition and Consumer Commission (ACCC) reports that opposition to the measure is slowly waning. The Commission currently hears from an average of 45 complaints per day—down from 63 per day in early July.18
Time will tell whether or not the current carbon tax will last. For now, the tax is a huge step forward for Australia. If it works as well as the EU carbon market has, it will be hard for other countries to continue to sit by and do nothing… are you paying attention United States and China?
