Sydney, Australia, November 9, 2011 – Australia passed landmark laws on November 8 to impose a price on carbon emissions in one of the biggest economic and environmental reforms in a decade.
The vote in the upper house Senate made Australia the second major economy behind the European Union to pass carbon-limiting legislation. New Zealand has a similar scheme.
Its impact will be felt right across the economy, from miners and liquefied natural gas producers to airlines and steel makers, and is aimed at making firms more energy efficient and push power generation towards gas and renewables.
The vote is a major victory for embattled Prime Minister Julia Gillard, who staked her political future on what will be the most comprehensive carbon price scheme outside of Europe, despite deep hostility from voters and the political opposition.
“Today Australia has a price on carbon as the law of our land. This comes after a quarter of a century of scientific warnings, 37 parliamentary inquiries and years of bitter debate and division,” Gillard told reporters in Canberra.
Opposition leader Tony Abbott has sworn to repeal the laws if he wins the election in 2013.
Australia accounts for just 1.5 percent of global emissions, but is the developed world’s highest emitter per capita due to a reliance on coal to generate electricity.
In the United States, California starts its scheme in 2013, while China and South Korea are also working on carbon trading programs. India has a coal tax, while South Africa plans to place carbon caps on its top polluters.
The scheme is a central plank in the government’s fight against climate change and aims to halt the growth of the country’s growing greenhouse gas emissions from a resources-led boom and age-old reliance on coal-fired power stations.
It sets a fixed carbon tax of $23.78 a ton on the top 500 polluters from July 2012, then moves to an emissions trading scheme from July 2015. Companies involved will need a permit for every ton of carbon they emit.
Australia’s carbon market is forecast to be worth as much as $15.5 billion by 2015, with sale of permits to raise A$25 billion in the first four years. Passage of the carbon price laws is expected to ensure the global market continues to expand over the next few years.
The World Bank estimated the global carbon market was worth about $142 billion in 2010, with the European Union Emissions Trading Scheme accounting for 97 percent of trade.
The laws are meant to give companies a financial incentive to curb pollution, and will help Australia reach its goal to cut emissions by 5 percent of year 2000 levels by 2020.
Farmers will be exempt from the scheme but will be able to cash in by selling carbon offsets under separate laws.
The package of 18 new laws sets up the carbon price as well as billions in compensation for export-exposed industries and local steel makers, as well as personal tax cuts for 90 percent of workers, worth an average A$300 a year.
Export-focused industries with intensive emissions, such as aluminum, zinc refiners and steel makers, will get 94.5 percent of carbon permits for free for the first three years.
The government expects the scheme to spur a multi-billion dollar investment rush in new, cleaner energy sources, including natural gas and renewable power stations, to replace Australia’s ageing coal-fired plants.