Securing Australia's Clean Energy Future

10 Jul 2011Archived News Climate Change Matters

The carbon price of $23 per tonne was delivered in a package of measures themed around securing a "clean energy future" for Australia. It was not simply focussed on introducing a carbon price mechanism.

For Australian business, there are complex issues to be considered and more information will follow on key areas such as energy efficiency. However, one thing is clear - business now has certainty.

Forward planning and investment decisions are now possible with the understanding that Australia is transitioning to a low carbon economy.

Key features of the announcement:

The price

  • $23 per tonne in 2012 - the price will rise by 2.5% in real terms per annum: ($24.15 in Year 2 and $25.40 in Year 3).

The carbon mechanism

  • Fixed price for the first 3 years commencing 1 July 2012.
  • From 1 July 2015, Australia will transition to a cap and trade emissions trading scheme with the carbon price to be determined by the market.

Who’s in?

  • The threshold has been set at 25 000 tonnes of CO2-e for assessing whether a facility is subject to the carbon pricing mechanism. Scope 1 emissions (direct emissions), together with legacy waste emissions, will count.
  • The Government suggests around 500 businesses will be required to pay for their pollution under this mechanism.
  • The following sources will be covered: stationary energy, waste, industrial processes and fugitive emissions.

Who’s not in?

  • Transport has been excluded, but a fuel excise will apply. Heavy on-road transportation will not have any changes until 1 July 2014.
  • Agricultural emissions - no requirements from livestock or fertilisers.
  • Refrigerants.
  • Scope 1 emissions from fuels are excluded (as the transport sector has been exempt and biofuels).

What’s the national trajectory?

  • Current commitment to 5% by 2020 with the ability to revise up to 15% or 25% dependent on global action.
  • A new national long term emissions reduction target of 80% by 2050 on 2000 levels has been set. This announcement is consistent with targets set by the United Kingdom and Germany.
  • A new Climate Change Authority will be established and headed by Bernie Fraser. This Authority will make independent recommendations to the government on the progress of the scheme, to ensure the longer-term emissions reduction target is met.

Where’s the money going?

  • More than half the revenue generated will go to helping households with tax cuts.
  • Remaining revenue directed to power generators, renewable energy, clean energy, jobs and competitiveness assistance program.

There are 3 areas of measures to ensure a smooth shift to a clean energy future: Jobs and Competitiveness Program, Clean Technology Program and the Clean Skills Program.

Clarification: 25 kt CO2-e threshold does not include liquid fuels

Energetics obtained advice from Minister Combet's office. Click to read more

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