Australia has just passed the final hurdle in its effort to establish a price on carbon that will lead to mandatory carbon reductions from the largest polluters. The country’s Senate passed the law without changes (this followed from the passage in the House earlier in the year).
Congratulations to our friends in Australia for this very important accomplishment. Australia is a major coal country so the victory is all the more powerful as many polluters aligned against the effort to reduce global warming pollution. Over 80% of Australia’s electricity comes from coal-fired power plants and the country is one of the world’s largest producers of coal. But the country also has significant renewable energy resources which will be further tapped into thanks to this law.
- Require the largest polluters to curb their carbon pollution. The program would require the 500 largest polluters—e.g., electricity and industrial companies—in Australia to pay for their carbon pollution. This would around two-thirds of Australia’s emissions. Beginning July 1, 2012 these companies would be required to pay about $24 per ton of carbon pollution (23 Australian dollars per ton). The price would rise by rise 2.5% per year till until July 2015 when these companies will be subject to a cap on their carbon pollution – through an emissions trading program.
- Establish fixed carbon pollution limits beginning in 2015. An independent body – the Climate Change Authority (similar to such a body in the United Kingdom) – will be tasked with recommending by February 2014 specific pollution limits for the first five year period. The government is required to consider the recommendations of this body in defining the legal pollution limits. The Australian government will announce the first 5-year carbon pollution no later than May 31, 2014. Each year the pollution limit will be extended by one more year so companies will always see defined 5-year pollution limits in which to plan their investments.
- Enshrine more aggressive 2050 pollution limits into law. As part of the new proposal the Australian government strengthened its 2050 target for emissions reductions from 60% to 80% below 2000 levels. This long-term target will guide near-term action as the targets will have to ratchet down over time to meet this 2050 target. So if this legislation passes Australia would be guided by a path to cut their emissions by 80% in 2050. That is an important trajectory for a country that is currently dominated by fossil fuel for its energy needs.
- Provide incentives for low-carbon energy. The proposal would create a new Clean Energy Finance Corporation that will provide over $10 billion in funding over 5 years for renewable energy and other clean energy through loans, loan guarantees, and equity. Recommendations for how this funding will be spent are due in March 2012. The legislation would also establish a Clean Technology Investment Program that would provide over $1.2 billion over 7 years to support Australian manufacturer’s investments in energy efficiency and renewable energy.
- Assist households. The legislation would use more than 50% of the revenue from the carbon pollution limits to assist households. The support will be delivered through income tax cuts for low and middle-income households and increased retirement payments.
As Prime Minister Julia Gillard said upon passage:
And as our friends at The Climate Institute stated (CEO John Connor):
“This is a vital cog in Australia’s pollution reduction machinery… This vote means Australia now brings greater credibility going into international climate negotiations starting later this month in South Africa. It also puts wind in the sails of other jurisdictions about to introduce, or considering, emissions trading schemes which similarly price and limit carbon pollution.”
The passage provides a bump to the upcoming high-level global warming negotiations in Durban, South Africa. After all, we need countries moving from pledges to changes in law. And this step by Australia was one of the key actions to watch before countries arrive in South Africa.
The inaction of the U.S. looks even starker as a result of this announcement. It puts a spotlight on the fact that the U.S. is quickly becoming the only country without clear carbon pollution limits on its major sources of pollution.
President Obama has the power to help the U.S. move from this growing isolation. He has the responsibility to act on two critical global warming policies in the coming months – deny the Keystone XL permit to stop dirty tar sands from flowing through the U.S. and implement strong carbon pollution standards on power plants.
Congratulations to all in Australia that worked so hard to pass this important law! I hope your momentum will help carry other countries, including the U.S., forward.
* Photo: Lake Hume in Australia, courtesy of
** Updated November 14, 2011 to reflect some minor modifications.
*** A useful summary is also available at: http://www.climateinstitute.org.au/images/reports/tci_policybrief_passingthepollutionpolicytest_july2011.pdf