When would Australia put a price on carbon?

Posted on January 25, 2011 by

The Vivid Economics report measured the six countries’ environmental performances by pitting their respective climate change policies to their indirect pricing policies such as pollution price tag, subsidies and regulations which is then gauged in dollars per tonne of carbon pollution. Australia’s performance was better than only South Korea when compared to its major trading partners UK, USA, China and Japan.

In Australia, the debate had continued over pros and cons of putting a price on carbon. The study recently released shows that Australia is clearly lagging behind in the clean economy, major trading partners already way ahead and the business in Australia stand to lose in a multi-billion market. Erwin Jackson of Climate Institute noted “Australia is at back of the pack, and unless we get it right, we are going to be economically disadvantaged as we move to low carbon economy.”

All of Australia’s major trading partners, UK, USA and China have put price on carbon in the electricity market. EU has had it for 5 years. UK has put a price of 29$ per tonne of CO2, US has a price of around 5$ per tonne and China has around 14$ per tonne. Erwin further states “China in particular has made a strategic decision that it wants to dominate the next industrial revolution, which will be a low carbon industrial one.”

Key driver of Australia’s strategy to climate change is the Renewable Energy target of 20% by 2020. But it is becoming clear that the business have to take next step. KPMG Accounting’s Jennifer Westacott noted “It is very clear that we are falling behind our trading partners and competitors. The failure to put a price on carbon will limit our capacity to attract investments.”

Greg Combet, the Climate Change Minister pointed that “In our economy, Carbon price will not only create incentive to reduce pollution, but will also provide certainty for the investments for businesses.”

Australian Industry however is cautious and holds that the transition must be well planned. Heather Aidout of Australian Industry Association says “Competitiveness must be maintained, otherwise we have jobs and investments lost and the emissions won’t go down either.”

There is definitely a long political path to go down before Australia gets a price on carbon. All parties but now agree that it is not a matter of if but of when.



Agneya’s analysis