Australia’s carbon tax proposal is poorly received

Updated On: Jul 12, 2011

Australia’s government unveiled plans for a carbon tax on Sunday in an attempt to address Australia’s record as the highest per capital carbon emitter in the world.

The tax begins at US$24.80 a ton and will rise by 2.5 percent a year. In 2015, it will move to a market-based trading scheme, the largest emissions-trading scheme outside Europe.

The government aims to cut Australia’s carbon emissions by 159 million tonnes, as well as meet 20 percent of its energy demand with renewable energy sources, by 2020.

John Connor, CEO of Sydney’s Climate Institute, said that the carbon pricing scheme will have global implications in a world where nation are considering moves to reduce their carbon footprint.

“Other countries will look at one of the most carbon polluting economies on the planet that has made one huge stride forward toward putting a price on carbon,” he said. “That should be a boost for those who are calling for this everywhere from Japan, South Korea, South Africa through to the United States.”

Report & Analysis: Australia’s carbon tax to have positive impacts in fighting against global warming [Xinhua, 11 Jul 2011]

However, the plans have not been warmly received by the liquefied natural gas (LNG) and mining industries, which argues the tax will make the industry less internationally competitive.  

The Australian Petroleum Production & Exploration Association (APPEA) says the proposal will leave Australia’s gas export industry vulnerable. Furthermore, the tax will not provide enough incentives to switch to cleaner burning fuel, according to APPEA.

Analysis: Q+A – Australia’s carbon tax and the LNG industry [Reuters, 11 Jul 2011]

David Peever, managing director of mining group Rio Tinto, expressed disappointment at the tax proposal, calling it an unfair tax on Australian exporters that would hinder investment and jobs growth without cutting carbon emissions. “Australia’s minerals sector now faces significant additional costs not faced by competitors,” he said.

Report: British firms cry foul over Australia’s carbon tax [Independent, 12 Jul 2011]

Australian stocks were also hit by the announcement, with airlines, energy, coal and steel companies losing the most ground. Economists said the policy would take time to work through the market.

Report & Analysis: Companies sound alarm [Sydney Morning Herald, 12 Jul 2011]

Australian Prime Minister Julia Gillard has also experienced a plunge in her ratings approval. Nevertheless, she has said she will press on with the campaign for the long-term benefits of cutting Australia’s carbon pollution.

The Prime Minister has promised that all revenue collected from the tax will go towards household compensation, allowing citizens to tackle higher fuel prices and household energy bills.

Report & Analysis: Carbon tax: bitter pill to save Australia’s environment [International Business Times, 12 Jul 2011]

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