Australian Lawmakers Will Vote on Carbon Tax Proposal This...

Australian Lawmakers Will Vote on Carbon Tax Proposal This Week

Australia’s parliament will vote this week to put into law the nation’s first tax on greenhouse gas emissions aimed at cutting reliance on fossil fuels and boosting renewable energy.
“Putting a price on carbon will break the link between emissions growth and economic growth, driving innovation to find better, less polluting ways of producing power, goods and services,” Treasurer Wayne Swan said in a statement yesterday.
The developed world’s biggest per capita polluter will raise A$27.8 billion ($27.2 billion) in three years by making companies pay for carbon emissions, Prime Minister Julia Gillardsaid in July when unveiling details of the policy.
Gillard pledged before last year’s election that the government wouldn’t adopt a carbon tax, and her approval of the plan has made her Australia’s least-popular prime minister in 18 years, according to opinion polls.
Company executives have said the tax threatens mining jobs and will push up airfares and food prices. The government is offering A$47 billion to assist industry and households and spur renewable energy investment through 2020.
“It’s not an easy reform and I realize it’s got some vocal opponents,” Swan said. “I’m confident that in time more and more Australians will come to recognize how important this decision is for both our generation and those to come.”
Green Support
The government plans to charge the country’s biggest polluters A$23 per metric ton of carbon dioxide from July 1 next year in a bid to reduce emissions 5 percent by 2020 from their 2000 levels. Gillard has support from the Greens party and the three independent lawmakers needed to pass the program.
Australia, which relies on coal to generate 80 percent of its electricity, will require about 500 businesses to pay for pollution. The program will boost annual inflation by 0.7 percentage point in its first year, the government estimates.
The tax will rise by 2.5 percent a year, plus inflation. The legislation will also cut the diesel fuel rebate for mining companies and raise the excise on aviation kerosene, the fuel mostly used by airlines, increasing it to 10.16 cents a liter in 2014-15 from 3.556 cents now. The emission tax will switch to a cap-and-trade system in 2015.
The government will provide A$9.2 billion over three years to assist high-polluting businesses such as aluminum smelters, steelmakers and pulp manufacturers.
BlueScope Ltd. and OneSteel Ltd. (OST), Australia’s biggest steelmakers, will receive A$300 million of assistance. Energy supply companies including Origin Energy Ltd. (ORG) and AGL Energy Ltd. (AGK)have welcomed the plan.
Coal Miners
Origin and AGL “are more likely to win than lose from carbon pricing” because of their natural gas and renewable energy expansion plans, Citigroup Inc. said in a July 5 report.
Coal mining companies will get A$1.3 billion, with the biggest polluters getting assistance over six years, according to the government. Anglo American Plc. (AAL), which mines coal in Australia, said the tax threatened current and future coal investments in Australia.
The plan may cost as many as 2,700 industry jobs in Queensland, the Queensland Resources Council has said. The state is the world’s biggest exporter of coal used to make steel.
Aluminum producers estimate Gillard’s plan will impose extra costs of A$120 million on the industry in its first year, rising to A$400 million in 2020. The policy will put local producers at a disadvantage to overseas competitors, the Australian Aluminium Council said.
Facing Losses
Power generators facing losses in the value of their assets will receive A$5.5 billion in assistance, said the government, which will also provide loan support to electricity suppliers and payment for the closure of coal-fired plants to remove as much as 2,000 megawatts of capacity by 2020.
Qantas Airways Ltd. (QAN), Australia’s largest airline, said it can’t absorb the cost of the tax, while budget carrier Virgin Blue Holdings Ltd. (VBA) said higher fares in Australia would be inevitable. The Australian Food and Grocery Council has predicted price rises.
The A$23 cost compares with allowances that averaged 14.26 euros (A$19.08) a ton during the past 12 months in Europe, which started the world’s biggest emissions-trading program in 2005.
Part of the plan includes A$10 billion for the Clean Energy Finance Corp., which will invest in businesses seeking funds to get projects off the ground, according to the government.
A carbon price may help trigger about A$20 billion of investments in renewable energy by 2020, the Clean Energy Council, an industry group, said in July. Spending on new gas-fired stations may reach A$14.7 billion through 2016, said Fitch Ratings.
To contact the reporter on this story: Elisabeth Behrmann in Sydney at [email protected]
http://www.bloomberg.com/news/2011-10-09/australian-lawmakers-to-vote-on-carbon-tax-this-week-swan-says.html