The Trans-Tasman carbon test

Hot Topic reader and regular commenter Simon Johnson (aka Mr February) was spurred by the discussion here about Australia’s new carbon pricing policies to dig into the details. In this guest post he looks at how the new Aussie scheme compares with NZ’s Emissions Trading Scheme…

I have to admit I did rush to conclude that the Australian carbon pricing scheme would be a “leapfrog” ahead of the NZ Emissions Trading Scheme. I also admit that I generally think the NZ ETS is worse than nothing as a policy to reduce GHG emissions. So of course the Australian scheme must be more effective!

Now that I have actually read Julia Gillard’s carbon pricing proposal I can offer a slightly more considered opinion. The carbon price scheme has a name which we should be using; Securing a Clean Energy Future. The full document is Securing a Clean Energy Future, The Australian Government’s Climate Change Plan, Commonwealth of Australia 2011, ISBN 978-0-642-74723-5.

First of all, the ‘Clean Energy Future’ is not a carbon tax. It is a cap and trade emissions trading scheme with a safety valve. Page 25 says:

“Large polluters will report on their emissions and buy and surrender to the Government a carbon permit for every tonne of carbon pollution they produce.”

That’s very much an emissions trading approach, but with a fixed carbon price for three years. The price is $AU23 per tonne from 1 July 2012, then $AU24.15 in 2013-14 and $AU25.40 2014-15 (p 26). From 1 July 2015, the carbon price will float within and upper and lower ceiling with the Government setting an overall ‘Cap’ or limit on GHGs (p 27).

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