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July 18, 2012
Pros and Cons of Australian Carbon Tax
    by Robert Kropp

Implemented on July 1st, Australia's carbon pricing scheme imposes a price of $23 per ton on carbon emissions. But some clean energy advocates argue that the policy does not go far enough.

The official pricing of externalities commenced in Australia on July 1st, when the government of Prime Minister Julia Gillard introduced a carbon pricing scheme. The Clea n Energy Legislative Package imposes a price of $23 per ton on carbon emissions. The carbon price will increase by 2.5% per year for three years.

In 2015, an emissions trading scheme will take effect, and the price of carbon will be determined by the market.

During a forum in Perth this week, Gillard said, "It will make a difference of 160 million tons in 2020. That's the equivalent of getting 45 million cars off the road, and I personally have spoken to business people about how they are going to transform their businesses and cut the amount of carbon pollution they generate because it's now priced."

Nathan Fabian, CEO of the Investor Group On Climate Change (IGCC), said of the policy, "There are many benefits that institutional investors see in the current carbon pricing policy for Australia. They include the efficiency of using a cap on emissions and a price to reach Australia's 2020 emissions reduction target and the fact that the policy framework can respond to the need for deeper emissions cuts in the future."

According to Greg Combet, the Minister for Climate Change and Energy Efficiency, Australia is the highest emitter of greenhouse gases (GHG) per person among developed nations. It has committed to a five percent reduction in emissions by 2020.

The Clean Energy Legislative Package also created the Clean Energy Finance Corporation (CEFC). By investing a total of $10 billion in Australian companies utilizing renewable energy, energy efficiency, and low emissions technologies, the CEFC hopes to catalyze private investment and further reduce carbon emissions.

But Beyond Zero Emissions (BZE), a nonprofit research organization, argues that the aims of the CEFC do not go far enough. Calling the CEFC a distraction, not a solution, BZE states, "What is really needed to expand the type and amount of renewable energy installed in Australia is a comprehensive, uncapped policy which addresses both financial and non-financial barriers."

The CEFC, BZE continues, fails to address non-financial barriers to renewable energy.

BZR recommends that Australia implement "a German-style Feed-in-Tariff (FiT)." According to the Clean Energy Council, an FiT for small-scale solar photovoltaic (PV) projects in South Australia resulted in investments totaling $4 billion. "The vast majority of this was on individual rooftops, representing a 300% growth in kilowatts installed from the previous year," BZE noted.


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