Abby L. Harvey
GHG Monitor
7/18/2014
The Australian Government voted late this week to repeal the country’s carbon tax, under which high carbon emitters had to pay a price for each metric ton of carbon emitted. The tax had been in effect since 2012 and was approximately $23.4 per metric ton of carbon dioxide at the time of the vote. Repealing the tax has been “a cornerstone of the government’s plan for a stronger economy built on lower taxes, less regulation and stronger businesses, whilst reducing emissions,” Minister for the Environment Greg Hunt said during debate in Parliament this week.
The vote was met with strong opposition, however, from the opposition Labor Party who had instituted the tax while in power. “This Prime Minister of ours is no leader. He is incapable of identifying the risks and costs of inaction. He is sleepwalking his way into a major climate policy disaster—a disaster for the Australian economy, and for our environment; a disaster that guarantees that forever, Tony Abbott will be remembered as an environmental vandal,” Opposition Leader Bill Shorten said.
New Government Calls for Emission Reduction Fund
In April, the Government, led by the Liberal Party, released their answer to the carbon tax in the form of the Direct Action Plan which included a provision for a proposed Emissions Reduction Fund (ERF) which would work in a series of “reverse auctions” in which companies would be paid to volunteer to reduce their emissions. “We categorically accept the science of climate change. We categorically accept the need for action. But we categorically do not accept a system that fails to work, that does not achieve significant reductions and that comes at a significant cost,” Hunt said of the carbon tax this week. “We are committed to a better way that actually reduces emissions and cleans up power stations, cleans up land fill and cleans up waste coal mine gas and reduces emissions by improving energy efficiency.”
The ERF will work as a series of auctions conducted by the Clean Energy Regulator during which time companies can purchase emissions reductions at the lowest available cost. It is the hope of the Government that the auctions will create competitive pressures to purchase the reductions. Should the plan be passed, auctions will begin in the second half of 2014 and will run quarterly. At the close of each auction period the Government will enter into contracts with successful bidders to guarantee payment for the delivery of emissions reductions.
