July 1 is not only Canada Day, but also the day that the carbon tax comes into effect in Australia. Drafts of the bills that implement the carbon tax were released about a year ago. The Clean Energy Bill 2011 was passed by the Australian Parliament in October, 2011.
According to the Garnaut Climate Change Review, Australia’s per capita emissions are the highest in the OECD and among the highest in the world. According to the Australian government, in addition to the negative effects of carbon emissions to quality of life and the environment, there are significant risks to the Australian economy if steps are not taken towards pricing carbon.
The carbon pricing scheme will impose costs on Australia’s heaviest polluters, which will result in higher end prices for certain products including electric power. The price on carbon will directly affect approximately 500 businesses. Polluters will pay per tonne of carbon they release into the atmosphere. This cost will initially be set at $23/tonne, and increase gradually until 2015, when Australia will shift to a trading scheme that will let the market set the price of carbon.
There are six streams of industry assistance in the carbon price package.
- The Energy Security Fund provides $5.5 billion to be used for negotiating the closure of 2 GW of highly polluting power generators.
- The Coal Sector Jobs Package provides $1.3 billion of transitional assistance over six years to implement carbon abatement technologies in the most polluting coal mines. Australia is one of the world's biggest coal producers, with much of its production exported to China, the world's biggest source of emissions.
- Some companies, termed “trade-exposed”, compete with offshore companies who may not be subject to the a similar carbon pricing scheme. The Jobs and Competitiveness Program provides $9.2 billion worth of free permits to trade exposed industries such as steel manufacturers, aluminium producers and cement producers.
- The Clean Technology Program provides $1.2 billion of grants to manufacturing industries to help them improve their energy efficiency and adopt low-pollution technology. It also includes funds for clean energy and energy efficient research and development.
- The Steel Transformation Plan provides $300 million worth of transitional assistance over five years.
- Small businesses will see their instant asset write-off increased to $6,500.
The Australian Treasury estimates that an average family will pay $9.90 more per week in the first year of the scheme’s introduction.