Australia PM Gillard announces carbon pricing plan; transport fuels exempt, but lowered fuel tax credits to bring carbon price to some businesses
10 July 2011
|Australia’s per capita CO2 emissions are higher than those of the US due to an emissions-intensive energy sector. Click to enlarge.|
Australia Prime Minister Julia Gillard unveiled Australia’s carbon pricing plan—a core element in a new clean energy plan—in a short address to the nation. Under the scheme, around 500 of the largest emitters in Australia—facilities that have direct greenhouse gas emissions of 25,000 tonnes of CO2-equivalent per year or more (excluding emissions from transport fuels and some synthetic greenhouse gases)—will need to buy and surrender to the Government a permit for every tonne they produce. The Government intends to introduce legislation to underpin the carbon pricing mechanism into Parliament in the second half of 2011.
For the first three years, the carbon price will be fixed, before moving to an emissions trading scheme in 2015. In the fixed price stage, starting on 1 July 2012, the carbon price will start at A$23 (US$24.75) a tonne, rising at 2.5% a year in real terms. From 1 July 2015, the carbon price will be set by the market. Gillard said that by 2020, this would cut emissions by some 160 million tonnes per year.
The carbon pricing mechanism will cover four of the six greenhouse gases counted under the Kyoto Protocol: carbon dioxide, methane, nitrous oxide and perfluorocarbon emissions from the aluminium sector. The remaining greenhouse gases counted under the Kyoto Protocol (hydrofluorocarbons and sulphur hexafluoride) will face an equivalent carbon price, which will be applied through existing synthetic greenhouse gas legislation.
During the flexible price period, an overall cap will be placed on Australia’s annual greenhouse gas emissions from all sources of pollution covered by the carbon price. There will be no limits on individual sectors, firms or facilities. A price ceiling and floor will apply for the first three years of the flexible price period—i.e., the trading scheme. The price ceiling will be set at A$20 above the expected international price and will rise by 5% in real terms each year. The price floor will be A$15, rising annually by 4% in real terms.
More than half of Australia’s emissions will be directly covered by the carbon pricing mechanism and around two-thirds will be covered by a carbon price applied through various means.
We have had a long debate about climate change in this country. Most Australians now agree our climate is changing, this is caused by carbon pollution, this has harmful effects on our environment and on the economy—and the Government should act. Economists and experts agree that the best way is to make polluters pay by putting a price on carbon.
The first Australian Government to announce a plan for a carbon price was John Howard’s back in 2007. A lot has happened since then; the debate has been difficult and divisive. And no government—no political party or leader—can claim to have got everything right during this time. But we have now had the debate, 2011 is the year we decide that as a nation we want a clean energy future. Now is the time to move from words to deeds.—Prime Minister Gillard
Transport fuels will be excluded from the carbon pricing mechanism. However, where applicable, an equivalent carbon price will be applied through changes in fuel tax credits or excise. A carbon price will be applied to domestic aviation, domestic shipping, rail transport, and non-transport use of fuels.
A carbon price will not apply to household transport fuels, light vehicle business transport and off-road fuel use by the agriculture, forestry and fishing industries. In addition, at a later date, the Government will seek to establish an effective carbon price for heavy on-road liquid fuel use from 1 July 2014.
More than 50% of the funds raised from the carbon price will be used to fund tax cuts, pension increases and higher family payments. These will be permanent, Gillard said, matching the carbon price over time. Some of the collected tax money will fund investments in clean technologies such as solar, wind and geothermal—an estimated A$100-billion worth of investment in renewable over the next 40 years, Gillard said.
For governance, the Government will rely on three entities:
An independent statutory body, the Climate Change Authority, to provide independent advice to the Government on the performance of the carbon price and other initiatives.
One of the Authority’s roles will be to make recommendations to the Government on the year-by-year steps, and on the longer-term path, that Australia should take towards its 2050 target. The Government will make the final decisions. The Authority will report regularly on progress, giving the public an independent assessment of progress. The Authority will complete its first review—which will provide recommendations on the carbon pricing mechanism’s first five years of pollution caps—by February 2014.
The Clean Energy Regulator to administer the carbon pricing mechanism.
The Productivity Commission will undertake reviews relating to industry assistance, fuel tax arrangements and carbon pollution reduction activities internationally.
Other elements of the clean energy plan include:
To assist households with price impacts, there will be two rounds of tax cuts and increases in pensions, allowances and benefits. Significant tax reform will mean that more than 1 million people will no longer need to file a tax return. Increasing the tax-free threshold and cutting taxes also boosts incentives to work. Household transport fuel consumption will not be subject to a carbon price.
The Government will provide assistance to industry to support jobs and competitiveness for emissions-intensive, trade-exposed industries, manufacturing, food processing, metal forgers and foundries, electricity generators and small business, as agreed by the Multi-Party Climate Change Committee. The Government is also separately investing in protecting jobs in the steel and coal industries.
A A$10-billion new commercially-oriented Clean Energy Finance Corporation will invest in renewable energy, low pollution and energy efficiency technologies.
The Government will seek to negotiate the closure of around 2000 megawatts of highly polluting electricity generation capacity by 2020 to reduce pollution and facilitate a smooth energy market transition.
Farmers and land managers will receive significant support to pursue climate change action on the land and enhance biodiversity through a suite of measures including the Carbon Farming Initiative, the Carbon Farming Futures program and a new Biodiversity Fund. Emissions from agriculture will not be subject to a carbon price.
Low Carbon Communities will help local councils and communities improve energy efficiency in community facilities, including a new Low Income Energy Efficiency Program.
A further suite of energy efficiency measures will be developed in response to the report of the Prime Minister’s Task Group on Energy Efficiency. These include implementing mandatory CO2 standards for light vehicles.
Australia Clean Energy Future website
If coal fired power plants converted to IGCC, they would be cleaner and more efficient. They could also make synthetic fuels that would contain no sulfur nor benzene.
Posted by: SJC | 10 July 2011 at 09:11 AM
Now that the voters have been sufficiently greenhouse gassed it's time for the shakedown.
Posted by: Mannstein | 10 July 2011 at 11:57 AM
I said clearly to state terrorists(julia gillard) to do fuels with all industrial big chimneys co2 expels and recycling them back at the input.
Posted by: A D | 10 July 2011 at 02:07 PM
Well, it won't likely pass since the Australian pols understand the public no longer believes AGW hype. And they are dropping the "greenhouse gas" references to a minimum.
Meaning they know the old AGW ploy is a total loss and only by calling this an alternative energy tax - do they stand a chance of legislating it.
The funds raised should it ever be passed will help build the brand new energy infrastructure of CHP LANR/CF appliances for residences and light industry.
Posted by: Reel$$ | 10 July 2011 at 09:29 PM
Nobody has the right to pollute. Whoever does should pay the consequences. Australia's approach is defensible and could be part of the health care cost. USA should take note, specially with the current ultra high deficit.
Posted by: HarveyD | 11 July 2011 at 02:32 PM
The number one killer in the US is heart disease. The reason is a lousy diet and lack of sufficient exercise. It has nothing to do with CO2 in the atmosphere.
The number two killer for US males is prostate cancer. Again there is no correlation to CO2 emissions.
Frankly, to blame CO2 emissions for poor health of the population is just so much remararkable nonsense.
Posted by: Mannstein | 11 July 2011 at 04:36 PM
Man...there are many other pollutants more harmful to the human species. Fine particles from diesel and tires etc, tobacco smoke, fireplace smoke, nano-particles, many chemicals, additives, coloring, are but a few. It is difficult to establish which is worse for our health, funk foods or pollutants. Nobody has been seriouly counting.
Posted by: HarveyD | 11 July 2011 at 06:03 PM
Harvey, you mean there are many "real" pollutants more harmful... CO2 of course is not one of them. Else, why do we legally sell it for human consumption in thousands of products? Doh!
Posted by: Reel$$ | 11 July 2011 at 06:46 PM
CO2 has more of a global consequence, we all know what that is, so to say it is harmful to humans we know what that means too. Climate change that brings drought with crop failures and famine is harmful.
Posted by: SJC | 11 July 2011 at 07:46 PM
And not just droughts. Have you noticed how many more places have seen floods?
Posted by: ai_vin | 12 July 2011 at 07:53 AM
Er, because there is a huge increase in precipitation? Which has alleviated drought. AKA natural variation.
AGWs hide their fundamental religious fervor behind a facade of bad science (drought!, floods! fires! - locusts!) See the pattern?
And IF CO2 were so God-awful, why not stop selling it in billions of gallons of beverages each year? Doesn't every little bit help?
Posted by: Reel$$ | 12 July 2011 at 08:15 AM
You must live in a very small world if you believe precipitation in one part of it alleviates a drought in another part of it. Even in different parts of one country you can get hit by both at the same time.
Secondly, I'm not talking about normal levels of precipitation. For every degree of temperature rise air gains the ability to take up another 4% of water. With "natural variation" in air temps precipitation become greater than before. AKA floods. Floods don't alleviate the suffering of having your crops dry up, they just add to it with the suffering of having your house washed away.
Posted by: ai_vin | 12 July 2011 at 10:34 AM
If you want to use flood waters to alleviate drought you have to have the infrastructure in place to contain it, store it, and move it from where you have too much to where you have too little.
And THAT costs a sh/t load of money and takes a lot of time.
Posted by: ai_vin | 12 July 2011 at 10:42 AM
We may not know the effects that global warming and climate change will bring for a while yet, but why take the chance when the potential downside is something that we can not reverse right away. Having to live with the consequences for generations would not be good.
Posted by: SJC | 12 July 2011 at 07:17 PM
Gentlemen... Assuredly the coming energy revolution will put a quick end to the speculation that man made CO2 is causing the planet to misbehave. It is not too optimistic to see the massive adoption of distributed energy utilizing one of several LANR variations at costs estimated to be around $100/kW.
This will put a fast end to coal-fired plants under construction or in planning. The revolution is we now have a perfectly green technology to produce energy with. And fossil will be the first major sector to take the hit. Unless they opt to participate withOUT monopoly powers.
Posted by: Reel$$ | 12 July 2011 at 08:19 PM
I'm all for eliminating, through technical means, pollutants which are harmful to human health such as lead, diesel particulates, sulfur, etc. but a carbon tax on CO2 which isn't related to any health issues just makes zero sense unless you're a politician looking for more revenues ie more power.
We have enough trouble paying for bank fraud because the politicians are in the pockets of the Banksters.
Posted by: Mannstein | 13 July 2011 at 06:02 AM
Dustbowls and the consequent lack of food are a health issue. The destruction of local economies from drought has health impacts (not unlike the foreclosure crisis). If you want to reduce everything to its effects on human well-being, you can show that AGW is not trivial either.
Posted by: Engineer-Poet | 13 July 2011 at 09:26 PM