A Carbon Price for Australia from July 2012

Carbon Price

What is a carbon price? It is a charge to those who pollute, either through a carbon tax or an emissions trading scheme (ETS). The carbon tax gives certainty about the carbon price, but uncertainty about the emissions reduction. Whereas the ETS offers certainty about the emissions cut, with uncertainty about the carbon price.

The Australian government has planned to use an ETS, the so-called Carbon Pollution Reduction Scheme (CPRS), as a market mechanism in transition to a low-carbon economy.  The CPRS, which was originally planned to start on July 1, 2010, has now been shelved until 2013. The legislation to implement the CPRS was defeated in the Australian Parliament three times, in August and December 2009, as well as early last year. The Greens rejected the CPRS bill as it set out too low emissions target and too much compensation to the coal and power industries.

As reported by news, carbon price is back on the table. Prime Minister Julia Gillard announced to deliver a fixed price on carbon emissions starting from July 1, 2012, for around three or four years. Putting a price on carbon will then move to an ETS after 2015 or 2016.

This climate action to involving a broad range of industry via a carbon price is crucial for Australia commitment to achieve its ambitious target of 25% emissions reduction on 2000 level by 2020. Otherwise, as highlighted in the latest emissions projection report for Australia which was released by the Minister for Climate Change and Energy Efficiency yesterday, Australia's emissions will continue to rise on a business-as-usual (BAU) projection without further policy action.