Australia’s shiny new carbon tax is an empty promise
* 18:22 11 July 2011 by Fred Pearce, New Scientist Magazine.
Australia’s shiny new carbon tax, announced this week, is unlikely to
change the country’s status as the largest per-capita emitter of
greenhouse gases in the developed world.
Loopholes threaten to undermine its modest promise to cut emissions by 5 per cent by 2020.
First, emissions from forestry, farming and cars are exempt from the
tax. These are a significant omission. Some years, deforestation is
responsible for as much as a quarter of Australia’s emissions.
Second, the biggest emitters are being protected. Prime minister Julia Gillard has promised tax rebates to key industries, including
electricity generation and steel makers of between 66 and 94.5 per
cent. The scale of the rebates may undermine the incentive to cut
Australia’s climate policies have a long history of being confused and
contradictory. It signed up to the Kyoto Protocol in 1997, but only
after securing permission to increase its emissions by 8 per cent.
Since 1990, the baseline year for the Kyoto targets, its emissions
from burning fossil fuels have in fact risen by around 30 per cent –
more, even, than US emissions but it has, in effect, offset its rising
industrial emissions by reducing deforestation: levels in 1990 were
Gillard reports that emissions are growing by 2 per cent a year, but
says her carbon taxes would set the country on course for a 5 per cent reduction in emissions by 2020 relative to levels in 2000. But, once
again, this ignores emissions from forests and farming. What’s more,
the decision to set a target relative to 2000 emissions is strategic.
The growth in emissions between 1990 and 2000 means a 5 per cent
reduction amounts to significantly less when put in the context of
In fact, the target could allow Australia to increase its emissions.
According to Bill Hare, chief scientist at the non-governmental
organisation Climate Analytics, once deforestation and the base year
are taken into account a 5 per cent reduction could see Australia’s
real emissions as much as 26 per cent higher than 1990 levels by 2020.
It is a far cry from the call of scientists at the Intergovernmental
Panel on Climate Change for cuts in emissions from developed nations of 25 to 40 per cent by 2020.
Industry cries foul
This hasn’t stopped Australian industry from crying foul, and claiming
that the measures will bankrupt key companies. The country gets 80 percent of its electricity from burning coal, the dirtiest major fuel.
And it relies heavily on energy-guzzling industries like steel and
aluminium. The combined effect is per capita emissions three times
those typical in Europe.
The total bill for the new carbon tax is likely to be around AU$23
billion ($25 billion), paid by the country’s top 500 emitters.
Greenpeace estimates that the top four polluters – mining companies
BHP Billiton and Rio Tinto, oil and gas company Woodside and steel
giant BlueScope – should be liable for A$1.1 billion. But the rebates
will dramatically reduce this.
The money raised by the tax will go to set up a Clean Energy Finance Corporation, to promote renewables, and to compensate households forhigher fuel bills.
In 2015, the fixed tax will be replaced by a market-based emissions
trading system, similar to that in the European Union. Companies could trade their permits internationally. This will increase further the
uncertainty about the future trajectory of Australian emissions.