Australia Unveils Plan for Carbon Tax

On Sunday Australian Prime Minister Julia Gillard (left) unveiled a proposed policy to curb the country’s carbon emissions and trigger a shift to clean energy.  The legislation, which is believed to have enough votes to pass the Australian parliament, would go into effect next year and begins by putting a tax US$25 per tonne on carbon.  In 2015 the carbon tax would be replaced by a nation-wide cap-and-trade program.

The new climate policy has won support from Gillard’s Labor Party, as well as the Australian Greens and enough independent lawmakers to make its passage later this year very near certain.  The carbon tax concept is a cornerstone of the Green Party’s legislative agenda, and Gillard’s decision to pursue it helped her win support from the Greens in forming a new government after last year’s elections. 

Though Australia’s small population means its contribution to global warming is much smaller than that of the US, China, or Europe, Australians have one of the highest per-capita carbon footprints of any nation in the world.  That’s largely because of the country’s heavy reliance on coal for electricity generation.  About 80% of Australia’s electricity comes from coal-fired power plants, compared to 50% in the United States.  The country is also a major supplier of coal exports to China and other developing nations.

If Australia is going to shift from fossil fuels to clean energy sources that contribute little or nothing to climate change, a price on carbon will almost certainly be needed.  The Gillard government’s carbon tax is a step in that direction.  And though it doesn’t satisfy all the concerns of environmentalists, it could mark a turning point in Australian climate policy. 

The tax will be levied on Australia’s 500 biggest carbon emitters—those that produce 25,000 tonnes or more of carbon per year.  Agriculture, forestry operations, and most automobiles are exempt.  The amount of the tax represents another compromise with polluters, as it isn’t as high as a panel of experts recommended earlier this year.  However over the next nine years the tax is expected to cut carbon emissions by 159 million tonnes.  In addition it may prompt utilities to retire the nation’s dirtiest coal plants early. 

To minimize the impact on consumers, the Australian government is passing tax cuts elsewhere for middle and low-income households.  Some of the revenue generated from the carbon tax will also go toward rebates for consumers. 

The ultimate goal of the new climate policy is to reduce yearly carbon emissions in Australia to 5% below 2000 levels by the year 2020.  This pales in comparison with the UK’s goal of cutting emissions 50% below 1990 levels by 2025.  But it is one of the first examples of a comprehensive climate policy in any country outside of Europe.  New Zealand is the only other non-European nation with a national carbon tax or cap-and-trade program, though several US states have such policies in place. 

The debate over Australia’s carbon tax was long and vigorous, and for months it was unclear whether Gillard’s government would successfully pass a climate policy at all.  The powerful coal, steel, and airline industries came out against the legislation, and were joined by climate change deniers and anti-tax groups.  But organizations like the progressive group GetUp argued a carbon tax will spur economic development in clean energy, and protect Australians from the devastating effects of climate change.

In March hundreds of people rallied against the carbon tax, joining protests in most of the country’s major cities.  Their numbers were overwhelmed by the thousands of Australians who rallied for a carbon tax less than two months later, in early June.  10,000 pro-climate activists rallied in Melbourne alone, with smaller groups in cities across the continent.

As Australia’s new climate policy goes into effect, it will almost certainly inspire other nations to take the idea of pricing carbon more seriously.  As major carbon emitters like the US, China, and Japan decide what to do about climate change, the may well take inspiration Australia’s decision to pursue a carbon tax.  

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