July 8, 2011 / 5:05 AM / 6 years ago

UPDATE 1-Australia PM wins crucial support for carbon tax

* Carbon price details to be released Sunday

* Industry, householders to get compensation

* Export-exposed companies to get up to 90 percent of free carbon permits

* Govt to set up independent agency to promote renewable energy

By James Grubel

CANBERRA, July 8 (Reuters) - Australia’s government on Friday secured the final crucial vote needed to introduce a carbon tax, which will put a price on greenhouse gas emissions from the nation’s top companies and help cut 160 million tonnes of emissions by 2020.

Prime Minister Julia Gillard will detail the carbon plan on Sunday after more than six months of negotiations with Greens and independent lawmakers, and is expected to announce a starting carbon tax of around A$23 a tonne from July 2012.

The plan, which will transition to an emissions trade scheme in three to five years, will include substantial compensation for export-exposed industries, steelmakers, coal mines and electricity generators, including reported loan guarantees to help power stations refinance debt.

The carbon price will cover 500 of Australia’s top polluters, responsible for more than two thirds of Australian carbon emissions in an economy which relies heavily on coal for electricity generation and export income.

The carbon price will reportedly push up prices by around 1.0 percent, although the central bank has said it would look through any inflationary impact when its sets interest rates.

Gillard has promised compensation to 90 percent of householders for the higher food and electricity prices in a bid to help win public support for the tax and her ailing government, which has record low support in opinion polls.

The carbon price is a make or break issue for Gillard, who leads a minority government after last August’s dead heat elections.

But Gillard secured on Friday the final pledge of support needed to ensure the scheme can pass through parliament, when Tasmanian independent Andrew Wilkie, who was not part of the carbon price negotiations, said he would vote for it.

“I will be supporting the government’s move to put a price on carbon,” Wilkie told reporters in Canberra after a full briefing on the carbon plan. “I am satisfied the government has the settings right.”

Companies to be included in the scheme include electricity generators such as International Power , majority owned by GDF Suez, TRUenergy, owned by Hong Kong’s CLP Holdings , Australia’s largest steelmakers BlueScope and OneSteel Ltd as well as global resource companies such as Rio Tinto , BHP Billiton and Woodside Petroleum .

But export exposed companies will receive up to 90 percent of free carbon permits, while steel makers will receive up to 95 percent of free permits, with reports saying they could be shielded from the carbon tax for the first few years.

Coal miners and coal fired power generators are also set to receive considerable assistance, including reports the government will issue loan guarantees to help generators refinance debt.

Resources Minister Martin Ferguson on Friday also announced the government would set up a new independent renewable energy agency, which will oversee A$3.2 billion worth of government programmes to promote renewable energy.

Gillard plans a national campaign to promote the plan after Sunday’s release, and hopes the passage of the legislation later in the year will help her government claw back voter support ahead of the next elections, due in the second half of 2013.

Two previous attempts to push an emissions trading plan through parliament were defeated in 2009 when the Greens voted with the conservative opposition, with the Greens saying they emissions target of five percent cuts by 2020 was too low.

But the Greens will back the new carbon plan, which also aims to cut emissions by 160 million tonnes by 2020, or five percent of year 2000 levels, because the new target can be strengthened if the rest of the world takes stronger action.

Greens deputy leader Christine Milne earlier told reporters her party, which holds the balance of power in the upper house Senate, wants Australia and other countries to take stronger action to fight carbon emissions, blamed for global warming.

She said the Greens would prefer a carbon price of around A$45 to A$50 a tonne, but it was clear global action and international carbon prices meant that would not be suitable.

“We are working in an environment where an emissions trading scheme has to go with an international price,” Milne told reporters, adding Australia’s scheme could be made tougher if the world agrees to stronger action on climate change.

“We have a view about how quickly we’d like to be addressing climate change, but our focus in the climate negotiations has been to make sure that if the world does decide to become serious about climate change... there would be nothing in the scheme that prevents us making those adjustments.” (Editing by Ed Davies)

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