Australia to Join Carbon Market
Air Date: Week of October 14, 2011
Melbourne, Australia (Takver)
Coal is central to Australia’s economy, but the parliament there has now given a boost to worldwide efforts to put a price on carbon. The controversial plan is expected to gain final approval next month which means Australia’s 500 largest polluters will have to pay for every ton of carbon they emit. As Mark Tamhane of ABC - the Australian Broadcasting Corporation – tells host Bruce Gellerman, the legislation is expected to dramatically change the country’s economy.
GELLERMAN: From the Jennifer and Ted Stanley Studios in Somerville Massachusetts, this is Living on Earth. I'm Bruce Gellerman. Australia is the largest exporter of coal in the world, and per capita, it’s the largest emitter of greenhouse gases among developed nations.
But, soon, Australia will also be one of the world's largest reducers of global warming emissions. Australia’s lower house of parliament has narrowly passed legislation that puts a stiff price on carbon - a heavy tax on every ton of carbon dioxide produced by the nation’s biggest companies. Mark Tamhane, an executive producer with ABC Newsradio, joins me from Sydney down under. Hi Mark - thanks!
TAMHANE: Thank you very much!
GELLERMAN: I must say, for the world’s largest exporter of coal, this is a very bold move.
TAMHANE: It is, and it’s a very controversial move. The public is split right down the middle. A lot of people argue that we must do something about climate change and reducing carbon emissions for our grandchildren - that’s a cry that you hear from a lot of older Australians. But at the same time, they say the way to do it is not by putting a great big new tax on everything.
GELLERMAN: So this was a real squeaker of a vote in the House of Representatives: 74-72.
TAMHANE: It certainly was. You have to remember that in Australia we currently have a minority government, and this is quite a difficult political issue for Prime Minister Julia Gillard because she clearly said before the last election: “Under no government that I lead, will there be a carbon tax,” quote, unquote.
But she didn’t get the votes to form a government in her own right. And this is one of the political prices that the Greens and the Independents have forced her to pay.
GELLERMAN: Well, she obviously changed her tune a lot. I want you to listen to this clip that we have of the Prime Minister.
GILLARD: I believe after all of that debate, the vast majority of Australians believe that climate change is real. The vast majority of Australians believe it is caused by carbon pollution made by human beings. The majority of Australians want to see that carbon pollution reduced.
TAMHANE: Now, there are many people that do believe that climate change is occurring, but people in business and industry argue that imposing a carbon tax is not the easiest way to reduce emissions. And anyway, if it did reduce emissions - their argument goes - Australia is only responsible for 1.5 percent of global emissions. So really, whatever we do is insignificant compared to what happens in the USA, in China, in Brazil.
GELLERMAN: Well, 80 percent of your energy comes from coal, and the conservative opposition leader Tony Abbott is fiercely against the tax. Let’s listen to what he has to say.
ABBOTT: Look, I think it is a day of betrayal. And this is a betrayal which is going to add to families’ costs of living, and it's going to threaten Australians' jobs. I think every Labor member of Parliament who went into the Chamber this morning has broken faith with the Australian people.
GELLERMAN: He says: ‘We can repeal the tax, we will repeal the tax, we must repeal the tax, this is a pledge in blood - this tax will go.’
TAMHANE: And indeed, that’s what he is promising to do. We should point out that this scheme would come into effect - it will now be passed in the Senate, there’s no doubt about that because the government has the numbers - it will come into effect on the first of July next year.
Carbon will be priced at 23 Australian dollars, which is roughly 23 US dollars, a ton, which I might add, is significantly above the current European Union carbon price. That’s another big beef with industry, they’re saying: Well, this is a very high carbon price. They don’t tend to put so much emphasis on the compensatory measures that the government is putting in - they’re focusing more on the headline carbon price.
But it is still two years from now until Prime Minister Julia Gillard needs to call an election. So you wonder how hard it would be for a Tony Abbott conservative-led opposition to try and undo this huge economic change, which really is going to change the fundamental structure of the Australian economy the way it is designed.
GELLERMAN: Well, the way I understand this is designed is that for three years, starting in 2012, businesses and households would get a tax cut from money that was raised on this tax on these very large emitters of carbon dioxide.
TAMHANE: Yeah. If you take an average household in Australia, the government estimates that household bills would rise by $514.80 a year. But the average assistance to that family, through tax cuts and various other measures, is estimated by the Australian treasury to be $525.20 a year.
So as you can see, the net effect is roughly 10 Australian dollars - ten American dollars - better off. And for poorer Australians, the compensations measures are even more generous. So that pensioners, for argument’s sake, would be over compensated, whereas people at the higher end - higher, wealthy income earners, they would feel some pain from this tax.
GELLERMAN: And the money that was raised from the tax would also be used to invest in clean energy initiatives. And, I guess, a billion dollars would be used to protect forests and biodiversity.
TAMHANE: There are a number of measures like that. You’ve got to also understand that a lot of measures will be going back to industry - like the aluminum industry, which causes an incredible amount of Australia’s carbon emissions. The effective carbon price they would pay is probably only about one or two dollars.
GELLERMAN: Well, Australia has a lot of coal, and a lot of that coal goes to China. Are you basically exporting your emissions, in a sense?
TAMHANE: That is the argument put forward by a lot of environmental campaigners. Coal that is exported off overseas obviously doesn’t have a carbon tax, per se, on it. And you have to remember that Australia is the world’s biggest coal exporter, and because of our high local use of coal as well - Australians per capita, given our small population, given the size of our land and our huge reserves of coal, are actually per capita the world’s highest emitter of greenhouse gasses in the entire world.
GELLERMAN: Mark, thank you so very much.
TAMHANE: Thanks, Bruce.
GELLERMAN: Mark Tamhane is an executive producer at ABC Newsradio in Australia.
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