Monday, July 11, 2011

Taxing Carbon in the Outback

Australia CO2_0_tn
Australian Prime Minister Julia Gillard came out swinging during her recent announcement of a carbon tax plan for Australia, stating that "[n]o longer will the nation¬ís biggest polluters be able to pollute our atmosphere for free...Two decades of denial and delay will come to an end. Polluters will have to pay."

The tax will start at $24.60 U.S. per metric ton, and would rise by 2.5 percent a year until 2015.  A carbon trading scheme would then begin operation.  The goal of the plan is to reduce carbon emissions in Australia by 5 percent of 2000 levels by 2020 and by 80 percent of 2000 levels by 2050.  The plan would also include a $10.7 billion U.S. investment over five years into renewable and other clean energy projects.

In a rare move, Gillard announced the carbon tax plan on national television and also plans to take a two-week tour of Australia in an attempt to sway the populous.  Though the plan Australia-Global-Warming is likely to get through parliament, public opposition has been fierce, with some polls showing 60 percent opposition to a carbon tax.  Australian climate scientists even received death threats earlier this year. To assuage public angst, the plan includes tax cuts and payments to low- and middle-income families for any cost-of-living increases associated with the tax.

This is an important move for Australia, since it is among the world's top per-capita polluters. But it will also provide an important testing ground for the efficacy and functionality of a carbon tax/trade system other than the current one in operation in the E.U.  A welcome outcome for those hoping to harness a tax/trade system to combat climate change would be a relatively well-functioning system that does not spell doom and despair for the economy of Australia.  Of course, the opposite is also a risk - unforeseen problems with the system or consequences of its operation would provide ammunition to those hoping to stifle any efforts at curbing carbon emissions.

We will have to wait a while to see how this Australian "trial-run" plays out.  But at the least this is a step in the right direction by another major economic power with a carbon addiction.  The more momentum that snowball gets rolling downhill, the more likelihood it will still be frozen when it gets to the bottom.

- Blake Hudson

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