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 nationÂ’s 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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