Australia Turns Back the Clock on Historic Carbon Tax, Cap-and-Trade

After reaching temperatures never before seen in Australia last year, the country created an entirely new temperature zone. And during last weekend’s election, Australia recorded its hottest year and hottest summer on record.

But that’s immaterial to the new national government which – as expected – is about to dismantle Australia’s pioneering carbon tax and any program that addresses climate change.

When Australia’s Prime Minister Julia Gillard got a carbon tax passed in 2011 – the first major economy to do so – conservatives vowed to eliminate it if they were elected.

Well, the conservatives won and new prime minister Tony Abbott is already following through on that vow. Calling the climate change argument "absolute crap" and campaigning on the promise to ‘axe’ global warming protection, repealing the carbon tax will be the first piece of legislation. 

Repealing the carbon tax, according to Abbott, would ease "cost of living" pressures and jump start a stalled economy. Apparently he isn’t aware that carbon tax legislation included compensation to taxpayers for any rise in energy prices…. or that experts around the world favor a carbon tax to both grow the economy while addressing climate change.

Under current legislation, a price on carbon, which covers only the 294 biggest polluters (coal, mining, smelters), increases gradually until 2015 and then morphs into a cap-and-trade program where the market sets the price. Last year, Australia agreed to connect with Europe’s carbon trading program in 2015, the first step toward a global trading system.

Other countries will soon start carbon trading programs and all are showing interest in linking them – China and Korea in 2015, and Vietnam,  Mexico and Peru recently passed national climate change legislation. South Africa has plans for a program.

Direct Action Plan Instead

Besides axing the tax and the planned cap-and-trade program for 2015, Abbott wants to dissolve the Climate Commission – an independent scientific body set up to provide credible information to the public about climate change – and while he’s at it – get rid of all that unnecessary spending on anything related to the environment. 

Instead, conservatives favor a "Direct Action Plan" where corporations that voluntarily cut emissions and farmers who voluntarily store carbon in the soil and plant trees get access to funds. There’s no penalty for those that don’t and companies with products "important for economic growth" get even greater leniency. Up to $3.2 billion would be set aside to help.

"The plan would deliver on our commitment to 5% lower carbon emissions by 2020 (than 2000 levels), they say. Experts say the plan won’t even meet that meager target, much less cutting emissions 80% by 2050.

"The Coalition uses the phrase "Direct Action" to obscure the fact that they take a voluntary approach to environmental policy. The policy has been described as a farce and a non-optimal, do-nothing approach by some Coalition members and it appears to be designed as a handout for the worst polluters," says Neil Perry professor at University of Western Sydney. It’s unlikely that anyone would choose to participate, he says.

"On day one of a new government – we will instruct the Department of Prime Minister and Cabinet to draft legislation to repeal the carbon tax. The Finance Minister will notify the Clean Energy Finance Corporation that it should suspend its operations and instruct the Department of Finance to draft legislation to permanently shut down the $10 billion fund [which encourages private investment in renewables]. The Environment Minister will instruct the department to start implementing the Coalition’s Direct Action Plan on climate change and carbon emissions," conservatives say.

If climate change is "crap," why bother cutting emissions at all?

Like US conservatives, who sing much the same tune, Australia’s conservatives got elected with massive financial contributions from you know who – the fossil fuel industry and media magnate Rupert Murdoch.

Abbott’s goal may not come as quickly as he’d like, however. He will have to negotiate with minority parties in the Senate to get rid of the carbon tax, and the Greens hold the balance of power until at least the middle of next year. Abbott will wait it out and probably succeed in late 2014, says Bloomberg New Energy Finance. 

Still, Abbott says legislation will be drafted immediately to dispose of both the carbon tax and mining tax. Meanwhile, wind is now cheaper than new coal and gas plants in Australia and  over 1 million homes have solar, about 10% of its population.

Australia is the world’s top greenhouse gas emitter per capita – with only 23 million citizens – (the US is #2) because it relies on coal for 80% of its electricity.

Speaking of Coal 

Abbot vows to reverse the slump in coal mining, announcing that Australia is "open for business," after his election. 

Steeply lower commodity prices and China’s slower economy have slowed Australia’s dizzying growth of the coal industry. Production is up 80% since the early 1990s and exports have doubled in the past decade, according to the International Energy Agency. But recently several new coal mining projects have been shelved and 11000 people laid off.

Australia has 9% of the world’s coal reserves, the fourth largest. It is the second biggest coal exporter after Indonesia.

Read our summary of what Australia’s carbon tax legislation contains.