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Australia's carbon tax debuts: Carbon Sunday, or Black Sunday?

| July 11, 2011

Aussie government debuts carbon tax scheme and $10Bn cleantech fund; who’s happy, who’s howling?

Australian PM Julia Gillard bet her government's future this week on a new Carbon Tax scheme

In Australia, the federal government launched plans for a $23 per tonne tax on carbon, which will affect the country’s 500 largest polluters commencing July 1, 2012.

“By 2020 our carbon price will take 160 million tonnes of pollution out of the atmosphere every year,” said Australian PM Julia Gillard. “That’s the equivalent of taking forty five million cars off the road.”

The government will exempt farmers, small business, families and road transport from the scheme, which will feature a carbon tax from 2012-2015, switching to an emissions trading scheme in 2015.

Road transportation fuels will be exempted from the tax initially, following pressure from two country independents, Tony Windsor and Rob Oakeshott, serving on the Multi-Party Climate Change Committee which developed the scheme. A carbon price on heavy on-road vehicles will debut on July 1, 2014, while personal and light business vehicles will remain exempt.

$10 billion for Clean Energy R&D, deployment

A centerpiece of the proposal: a Clean Energy Finance Corporation, that will invest up $10 billion in cleantech enterprises, and a newly-minted Australian Renewable Energy Agency (ARENA) that will manage $3.2 billion in existing renewables funding, plus a new $200 million Clean Technology Innovation Program. ARENA will consolidate the funding from 10 agencies and departments in solar, geothermal and biofuel energy.

The clean energy investments were a key element in securing support for the minority Labor Government from the Green Party, which controls the balance of power in the Australian Senate. The Greens surprised the Government with an early announcement on the ARENA deal, hailing the set-up of an independent corporation that will also have access to private sector funds.

Greens deputy leader Christine Milne said “There has been many, many examples of political interference either at cabinet or ministerial level to switch money around, to change the rules. Just as people get geared up to participate in a program, just as businesses expand and take on more people then the rules change. They can be sure now that the funding will be secure – that the rules will not be chopped and changed.”

The highly complex $25.5B scheme will include distribution of all revenues back into the community, plus up to $4B in increased federal spending, aimed at softening the price impact, with a focus on lower-income families.

Reaction to the package was sharply mixed.

20,000 people, voted in four separate polls in News Limited’s ”Carbon Tax Plebiscite”, following announcement of the carbon tax policy on what was quickly dubbed “Carbon Sunday”. 87.1 per cent said they planned to change their vote at the next election in light of the tax, with 60 percent saying they were more likely to vote for the opposition parties at the next election.

68 percent of voters rated the compensation measures as “Disgraceful, we shouldn’t have this tax at all anyway,” with 64.7 percent indicating, in the unscientific poll, that they opposed the carbon tax.

Among reasons for unhappiness? The government said that, under the scheme, household electricity prices would rise $171 per year, with a $78 per year increase in gas prices and less than $50 increases in food prices.

David Simon from the Australian Trucking Association said that the impact on the trucking industry, including cancellation of fuel tax credits, would total $510 million per year by 2014-15. Qantas tipped that increased costs of $115-$130 million would be recouped with fare increases.

The Australian Stock Exchange was down 1.5 percent in Monday trading.

The national newspaper The Australian made reference to the government’s U-turn from the last elections, when it pledged to voters that it would not introduce a carbon tax. “Seeking parliamentary endorsement for the proposal before securing a popular mandate is an error of judgment voters will find hard to forgive. The Prime Minister’s struggle for political redemption has just begun.”

Alternative Fuels Summit

The best place to gauge the impact?

The Biofuels Association of Australia (BAA) will be holding an Alternative Fuels Summit in Brisbane on 29/30/31 August 2011, in conjunction with AusBiotech.

The Summit will feature a strong line-up of global leaders in biofuels, including presentations from Federal Resources & Energy minister Martin Ferguson, former Queensland Premier Peter Beattie, Australia Party chief Bob Katter, as well as Global Hot 50 companies such as Coskata, LanzaTech, ZeaChem, Novozymes, and Shell.

Plus key research and commercial groups including Aurora Algae, Boeing, GM Holden, CSIRO, the Truck Industry Council, the Australian Trucking Association and the Australian Automobile Association. Biofuels Association of Australia chief Heather Brodie and Virgin CEO Sir Richard Branson are scheduled for welcome presentations at the Summit.

More on the program here.

 

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