| CANBERRA, July 10
CANBERRA, July 10 Australia unveiled plans on
Sunday to slap a carbon tax of A$23 a tonne on its 500 worst
polluters from 2012, sweetened by tax cuts for voters fearing
higher power bills, and paved the way to adopt the largest
emissions-trading scheme outside Europe.
Prime Minister Julia Gillard said the worst polluting
companies would have to pay a A$23 price that would rise by 2.5
percent a year, before the minority government moved to a
controversial market-based emissions scheme in mid-2015.
"Australians want to do the right thing by the environment,"
said Gillard, whose country is the rich world's worst per capita
greenhouse gas emitter due to a heavy reliance on ageing
coal-fired power stations for electricity generation.
Gillard, whose popularity has slumped to record lows over
plans to price carbon and drive up household energy costs, said
the plan would cut 159 million tonnes of carbon pollution in
2020, reducing emissions by 5 percent over 2000 levels.
"That is why the Gillard government is implementing a
comprehensive plan for a clean energy future for our nation,"
Australia's scheme will cover 60 percent of Australia's
carbon pollution apart from exempted agricultural and light
vehicle emissions, with Treasury department models showing it
would boost the consumer price index by only 0.7 percent in the
first year of the tax, in 2012-13 (July-June).
It could also aid global efforts to fight carbon pollution,
which have largely stalled since U.S. President Barack Obama
last year ruled out a federal climate bill this term. Outside
the EU, only New Zealand has a national scheme in operation.
Australia said it hoped to link its scheme, which would cost
A$4.4 billion to implement after household and industry
compensation to avoid a political backlash, to other
international carbon markets and land abatement schemes when its
emissions-trading market was up and running.
Europe's system, which covers the 27 EU member states plus
Norway, Iceland and Liechtenstein, has forced power producers to
pay for carbon emissions, driving cuts where power plants were
forced to switch to less carbon-emitting natural gas or biomass.
AID FOR STEEL-MAKERS, METAL REFINERS
Gillard said her government would spend A$9.2 billion over
the first three years of the scheme to ensure heavy polluting
industries like steel and aluminium production were not killed
off, and help close down the oldest and dirtiest power stations.
Assistance would come from free carbon permits covering 94.5
percent of average costs for companies involved in the most
emissions intensive and trade exposed sectors like aluminium
smelters and steel manufacturers, while moderate emitting export
industries would get 66 percent of permits for free.
Coal miners, including global giants Xstrata Ltd and
the coal arms of BHP Billiton , would be eligible for a
A$1.3 billion compensation package to help the most emissions
intensive mines adjust to the tax, which would add an average
A$1.80 per tonne to the cost of mining coal.
Australia, a major coal exporter, relies on coal for 80
percent of electricity generation, which in turn accounts for 37
percent of national emissions.
The government would also set up loan guarantees for
electricity generators through a new Energy Security Fund, to
help the industry refinance loans of between A$9 billion and
A$10 billion over the next five years.
The government would also fund the shut-down or partial
closure of the dirtiest generators and remove up to 2,000
megawatts of capacity by 2020, while short-term loans would be
offered to generators to help re-finance debt and buy permits.
Australia's booming liquefied natural gas (LNG) sector,
which is due to decide on A$90 billion worth of new projects,
would also be included in the scheme, despite calls for 100
percent protection. The sector will receive 50 percent
assistance, Climate Change Minister Greg Combet said.
Steelmakers, including Australia's largest steelmakers
BlueScope and OneSteel Ltd , will receive 94.5
percent of free permits and A$300 million in extra grants to
help support jobs.
Agriculture will be exempt, but the government wants farmers
and foresters to cash in on carbon offsets through its carbon
farming initiative, which will allow offsets through forestry,
changes to land clearing, savannah burning and animal
To sooth belligerent voters, who polls show are 60 percent
opposed to a carbon price, the government has offered tax cuts
to low and middle-income households, as well as increased state
pension and welfare payments.
As well as exempting fuel from the scheme for all motorists
except for heavy transport, the tax-free threshold would also be
tripled to A$19,400 by July 2015 when emissions trading begins.
"No Australian will pay more tax as a result of these
changes," Gillard said.
The stakes are high for Gillard's government, which has just
a one-seat lower house majority, but the package already has the
support of the Greens and key independents, giving her the
numbers she needs to pass it through parliament. Two previous
attempts in 2009 were defeated.
(Edxiting by Mark Bendeich)