Australia Kicks Off Carbon Tax
By James Grubel and Stian Reklev
July 1 (Reuters) – Australia on Sunday joins a growing number of nations to impose a price on carbon emissions across its $1.4 trillion economy in a bitterly contested reform that offers trading opportunities for banks and polluters but may cost the prime minister her job.
Australia’s biggest polluters, from coal-fired power stations to smelters, will initially pay A$23 ($23) per tonne of carbon dioxide emitted, more than twice the cost of carbon pollution in the European Union, currently trading around 8.15 euros ($10) a tonne.
The economic pain will be dulled by billions of dollars in sweeteners for businesses and voters to minimise the impact on costs, with the consumer price index forecast to rise by an extra 0.7 percentage point in the 2012-13 fiscal year.
The scheme allows emissions trading from 2015, when polluters and investors will be able to buy overseas carbon offsets, or ultimately trade with schemes in Europe, New Zealand and possibly those planned in South Korea and China.
Prime Minister Julia Gillard’s minority government says the plan is needed to fight climate change and curb greenhouse gas pollution. Australia has amongst the world’s highest per capita CO2 emissions due to its reliance on coal-fired power stations.
Yet even as it starts, the scheme’s future is in doubt. The conservative opposition has vowed to repeal it if they win power in elections due by late next year and have whipped up a scare campaign saying the tax will cost jobs and hurt the economy.
Gillard, her poll ratings near record lows and her Labor party heading for a heavy election defeat, hopes that the campaign will quickly run out of steam once the scheme starts.