August 19, 2022

Australia Proposes Carbon Trading Plan, Again

SYDNEY — Prime Minister Julia Gillard of Australia announced a plan on Sunday that would tax the carbon dioxide emissions of the country’s 500 worst polluters and create the second-biggest emissions trading program in the world, after the European Union’s.

The plan is projected to cut 159 million tons of carbon dioxide from the atmosphere by 2020, the government said. In 2010, Australia produced 577 million tons of carbon emissions, according to the Department of Climate Change.

For the 500 companies — which would include mining giants with operations in Australia like BHP Billiton, Rio Tinto and Xstrata — the government has set a price of 23 Australian dollars, or $24.70, for each ton of carbon dioxide emitted starting July 1 of next year, rising 2.5 percent annually before shifting in 2015 to a market-driven trading program.

A similar proposal by Ms. Gillard’s predecessor, Kevin Rudd, was largely blamed for having led to his political downfall. Ms. Gillard argued, however, that Australia — one of the world’s largest polluters, per capita — could no longer ignore its global responsibilities.

“Scientific evidence has confirmed our planet is warming,” she said. “And after years of debate and deliberation, most Australians agree the time to act is now.

“Australians want to do the right thing by the environment. We are a confident, creative nation that’s up to the challenges of tackling climate change.”

Australia has been able to weather the global financial crisis better than most developed economies primarily because of Chinese demand for its natural resources, particularly coal and iron ore.

Critics of the emissions reduction plan have argued that putting a price on pollution would cripple Australia’s manufacturing and export industries, a point they were quick to make Sunday.

The opposition Liberal Party, which has opposed an emissions trading program under its leader, Tony Abbott, criticized the announcement on its Web site, arguing that the cost would be passed on to Australian families.

“Julia Gillard has betrayed the Australian people,” the Liberals said. “The carbon tax is not revenue neutral — another Labor broken promise. This means a bigger deficit this year, higher debt, more taxes, smaller forecast surpluses in the future and greater pressure on interest rates.”

The Minerals Council of Australia, an influential mining industry group, also criticized the plan. “With no other nation implementing an economywide carbon tax, this is a dangerous experiment with the Australian economy,” it said.

Qantas, the Australian national airline, joined the criticism, saying ticket prices would have to rise because of the plan. “While we are still modeling the cost impact, at 23 Australian dollars per ton, there will be some effect on passengers through higher domestic fares,” it said.

But Tim Jordan, a senior analyst at Deutsche Bank in Sydney, dismissed the bulk of those concerns as driven by political, not financial, orthodoxy.

He called the program a “solid start to reducing emissions,” but said the tremendous concessions given under the plan proved that, if anything, the government listened to businesses’ complaints.

“There’s a lot of extra spending in the form of targeted grant programs and specific funding for particular industries,” he said. “Almost every sector that’s complained about the impact of a carbon price has received some kind of new fund.”

The government’s Jobs and Competitiveness Program has set aside 9.2 billion dollars to shield high-polluting industries during the first three years of the plan.

The most emissions-intensive industries — aluminum smelting, flat-glass making, steel manufacturing, zinc smelting and most pulp and paper manufacturing — would initially receive free permits representing 94.5 percent of each industry’s average carbon costs. The permits will not be tradable for the first three years.

Industries that pollute less, including some plastics and chemical manufacturing, would be eligible for free permits to cover 66 percent of the industry average, while liquefied natural gas would receive an effective assistance rate of 50 percent.

John Connor, chief executive of the Climate Institute, an independent research group, praised the proposal and said he hoped it would lead not only to a brighter environmental future, but also to a break in the increasing acrimony surrounding Australian politics.

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