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Australia’s Ambitious Scheme Sets World’s Highest Price on Emissions

Australia, with the highest per capita greenhouse emissions of any large developed country, will soon take on one of the most ambitious schemes to tackle climate change, with a new carbon-trading system.

The planned carbon tax will start in 2012 and apply first to the 500 worst polluting companies responsible for about 60 percent of the country’s emissions, making it the largest carbon market outside of Europe. Rates will start at 23 Australian dollars per tonne of carbon (US$24.20 per ton), higher than prices have been on the European emissions market for the past couple of years.

The carbon prices would gradually rise, and then the government would transition in 2015 into a cap-and-trade system, aiming for emission cuts by 2050 of 80 percent compared with 2000 levels.

Taxes Redefined

Australia’s plan was generally hailed by environmentalists and those working on renewable energy, and economists generally support it. But it waspanned by many in big industry, and Prime Minister Julia Gillard’s administration, already suffering low approval ratings, saw ratings drop furtherafter announcement of the new plan.

To avoid the carbon tax penalizing the poor, about half of the new revenues will be returned to citizens in the form of tax breaks for the lowest earners, part of an effort toward “reducing taxes on desirable things (work and income) … and replacing them with a charge on something undesirable (carbon pollution).”

The carbon tax is part of a package of new policies on climate and energy, which also include the creation of a new Australian Renewable Energy Agency, which will oversee more than $3 billion in funding, primarily for solar, wind, and geothermal energy. The funding boost will put “solar on steroids,” said John Grimes, chief executive of the Australian Solar Energy Society, aiding large-scale solar installations.

Nuclear Power Continues to Polarize

Meanwhile, the U.K. is embarking on a huge restructuring of its electricity market, which is outlined in a new white paper. The Guardian’s Damian Carrington argues the “sprawling and complex maze of measures … has the central aim of getting new nuclear power stations built.”

Since Japan’s Fukushima disaster, the U.K.’s Secretary of State for Energy and Climate Change, Chris Huhne, and others in the U.K. government have supported expanding the country’s nuclear power. Within days of Japan’s disaster, the U.K. government began drawing up a public relations strategy to downplay the disaster, according to a recent report on a leak of government e-mails.

The restructuring proposed in the new white paper would require spending £200 billion ($320 billion) on new infrastructure, but this won’t necessarily lead to higher electricity prices than customers would face otherwise, argues Huhne, since customers now are vulnerable to rising oil and gas prices.

Elsewhere, there are a growing number of countries planning or weighing a nuclear retrenchment. Most recently, Kuwait’s Deputy Prime Minister said the country is no longer interested in developing nuclear energy, and Japan’s Prime Minister urged his country to phase out nuclear.

France, the most nuclear-reliant country, is embarking on a new study of the country’s future energy mix that will consider the possibility of phasing out nuclear by 2040 or 2050.

Saudi Oil Peak?

After the announcement by the International Energy Agency that the world’s richer countries would tap into their emergency oil reserves, oil prices initially fell. For the U.S. portion of the release, many bidders vied for the oil, offering about $105 to $110 a barrel—which would raise more than $3 billion for the government.

The high number of bidders “shows there are concerns in the marketplace over just how much oil is going to be out there,” said David Pumphrey, deputy director of energy and national security for the Center for Strategic and International Studies.

After an acrimonious meeting of the Organization of Petroleum Exporting Countries in which members disagreed about whether to boost production, some countries decided to go it alone. The most significant is Saudi Arabia, which raised its output to about 9.5 million barrels a day—the same rate as before the global recession.

Meanwhile, major Wall Street firms warned of rising oil prices over the rest of this year and into 2012. Goldman Sachs, for one, raised its forecast prices, and said “it is only a matter of time before inventories and OPEC spare capacity become effectively exhausted” and prices soar. A major reason for the gloomier outlook, Goldman Sachs said, is Saudi Arabia won’t be able to pump as much oil as many had expected.

Solar Purchasing

The company Groupon offers big discounts as long as a bunch of people will sign up to a particular deal, and now San Francisco is emulating this model to boost solar power installations. By forming buyers’ groups, they hope to get around some of the barriers to small-scale solar, such as high transaction costs and availability of credit.

In another effort to finance small-scale solar, some firms are emulating Wall Street’s bundling of mortgages, by creating “asset-backed securities”—bundles of leases on residential solar panels.

The Climate Post offers a rundown of the week in climate and energy news. It is produced each Thursday by Duke University’s Nicholas Institute for Environmental Policy Solutions.

 

Comments

  1. [...] new carbon trading program puts one of the highest effective prices on carbon — about $24 per ton — with the goal of cutting 80% of total emissions by 2020 (over 200 levels). California is [...]

  2. [...] 2. Australia’s Ambitious Scheme Sets World’s Highest Price on Emissions [...]

  3. Question everything
    Australia
    July 14, 2011, 9:57 pm

    There is an enigma not recognised by many and should be highlighted. Australians have embraced the need to reduce GHG and everyone has installed low emission lights, hundreds of Gb of solar panels are on the roof, direct actions are evident. The previous PM Rudd wanted an ETS but this was voted down by the Greens and Rudd was removed from office by his own party. The present PM Gillard and the present Treasurer Swan publicly stated before the last election that there would be no carbon tax.
    Now Gillard, Swan and the Greens are proposing a major tax reform together with a Carbon Tax. The people of Australia do not support their economic solution. The government is spending millions on a marketing firm to sell the tax with the emphasis on making a tax the only way to reduce GHG and those opposed to the tax are labelled as being on the side of polluters. Anyone opposing the government and its supporters are deemed by them as the enemy. Australia;s GHG emissions is only 1.32% yet the proposed tax will raise in 3-months more money than the EU has raised over the past 5-years. The fuzzy outcomes predicted depend on a global trading scheme in place. Australia wants a better future but do not want the proposed economic fix. These are dangerous times and we must report the truth, the whole truth and nothing but the truth.

  4. peter lynch
    yagoona
    July 14, 2011, 6:53 pm

    No worries, Julia will fix the climate Juliais Ceaser

  5. BW
    Australia
    July 14, 2011, 3:24 pm

    The fight isn’t over yet for Australia. The Opposition Party and Murdoch Media (which owns 150 newspapers here and a near monopoly on the media) aren’t going down without a fight as they back the giant polluters. There’s a lot of division on the issue and a lot of fear and disinformation in the air. I ask you all, as people of our great planet to help make my fellow Australians understand the issue better. Please, for the sake of my country, for the sake of our planet – spread the truth.