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Australia To Remove Carbon Tax In Favour Of Emissions Trading Scheme

by Julian Hutchinson

On Tuesday July 15th 2013, Australia’s government moved to scrap their carbon tax and bring forward an emissions trading scheme a year earlier than planned. The carbon tax on Australia’s worst industrial polluters, which was to have remained in place until 2015, had been in effect since July 2012. At that point, it was set to be replaced by an emissions-trading scheme (ETS – akin to what is being proposed here in Ontario) in which the cost of emitting a tonne of carbon would be determined by buyers and sellers in a carbon-type “stock” market.

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Prime Minister Kevin Rudd is pushing the timeline forward for the implementation of the ETS to now begin on July 1, 2014. The move is estimated to reduce the cost of carbon by some 75% to $5.76 per tonne from a predicted $25.40 per tonne. “This is the fiscally responsible thing to do,” Rudd told reporters in the northern city of Townsville.

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“The nation’s 370 biggest polluters will continue to pay for their carbon pollution, but the cost will be reduced, meaning less pressure on consumers.”2

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Spending cuts to cover budget shortfall

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The move is expected to save Australians an average of $380 (Australian) per household per year, with the savings largely coming in the form of lower energy bills. The government will make up for a predicted $3.8 billion (Australian) shortfall in the federal budget with spending cuts, including scaling back funding for some environmental programs. The carbon tax had been enacted under the previous Prime Minister, Julia Gillard, having replaced Rudd who had been ousted as prime minister by Gillard in an internal coup three years earlier.

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Coal makes Australia one of world’s worst emitters

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Gillard had pushed through the carbon tax in a bid to gain needed support from the minor Greens party, despite a campaign promise not to do so. The Government defended the move as a necessary weapon against climate change. Australia is one of the world’s worst greenhouse gas emitters per capita due to its heavy reliance on massive coal reserves to generate electricity.