SYDNEY (Reuters) - 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.
- Tax to take effect mid-2012 before moving to a carbon-trading system in mid-2015
- Price initially set at A$23 per tonne
- Aims to cut carbon pollution by 159 million tonnes by 2020 or by 5 percent based on year 2000 levels.
- CPI to increase 0.7 pct in 2012-13, 0.2 pct in 2015-16
- To spend A$9.2 billion to help heavy polluting industries like steel and aluminum, and close dirtiest power stations.
”Our transport analysts are of the view that airlines will struggle to pass on the full cost of carbon in ticket prices. So the impact will be quite hard of them.
There are some companies that are mid-carbon that are going to come out ahead and Origin and AGL are ones for us that given their relatively low emissions generation portfolios and the fact that their small exposure to brown coal will probably get compensated by the government.”
He said Bluescope Steel might be able to offset some or all of its carbon liability through the new innovation and production fund for the steel sector.
“This is a very positive step for the global carbon market, that Australia going to introduce a reasonably robust carbon price and it is going to link to international markets within three years.”
DAVID LIU, RESEARCH HEAD, ABOVE THE INDEX ASSET MANAGEMENT
“You might expect the discretionary consumer stocks to relatively outperform on the back of the tax cuts. The consumer discretionary sector has been an underperformer for the last six months on the back of higher rates and a more frugal consumer”. He listed likely beneficiaries of the tax cuts as JB HiFi, Harvey Norman, Myer and David Jones.
On mining and metals stocks, such as Rio Tinto, BHP Billiton, OneSteel and BlueScope: “I don’t think there’s anything that’s been announced today that would cause significant concerns,” he said, noting much of the new policy had already been priced into the market.
”We support action on climate change but are disappointed at the government’s lack of genuine consultation with the community, business and the Government’s Multi Party Committee on Climate Change in designing the package announced today.
We have consistently advocated for a scheme that protects all exposed export industries, invests in low emission technologies; and provides a phased introduction with clear longer term emissions reduction targets.”
”It will impose the highest carbon price in the world, compromising the competitiveness of Australia’s export and import competing sectors without environmental benefit.
The design of this new tax scheme is wrong. Australian industry is being hit with the world’s biggest carbon tax to fund a package that will not reduce greenhouse gas emissions. Under the carbon tax package, the minerals industry will face costs of $25 billion between 2012 and 2020.”
DYLAN BYRNE, PARTNER, HEAD OF NATIONAL SUSTAINABILITY ADVISORY GROUP, BDO ACCOUNTING
“For coal miners it’s a bit of a triple whammy coming on the heels of the mining rent tax and the high Australian dollar. Now, the industry that is driving the country has been hit with a third cost. It’s going to have an impact. There are going to be certain projects either being mooted or underway where the numbers now just don’t stack up. Add to that the uncertainty in the worldwide market and it could be just too much for them.”
MILES PROSSER, EXECUTIVE DIRECTOR, AUSTRALIAN ALUMINUM COUNCIL
”This imposes a carbon cost on Australian aluminum producers of at least $60 per tonne of aluminum compared to only $8 per tonne in China.
Australia’s carbon cost will rise every year of the scheme and over the next decade to more than $200 per tonne of aluminum while in China it is not expected to get any higher than $60. The Government only wants you to look at the first year of the scheme. The initial costs are bad enough but we need to look at the huge cost increases that are being locked in for the future.”
BELINDA ROBINSON, CEO, THE AUSTRALIAN PETROLEUM PRODUCTION & EXPLORATION ASSOCIATION
”The export gas industry rejects the politically motivated label of ‘big polluter’ when for every tonne of emissions produced in liquefying natural gas, up to nine and a half tonnes are removed from the atmosphere when substituted for coal in customer countries.
Whether used in Australia or exported, gas has a big part to play in reducing global emissions and there is no rational reason for a policy that sees Australian gas use increase but exports constrained.”
”We need to work through the detail of what has been announced today, but clearly the package has attempted to address a number of key concerns including risks to the efficient and reliable operation of the electricity market, particularly in Victoria and South Australia.
AGL supports the introduction of a price on carbon emissions as soon as possible to provide investment certainty for the energy industry as Australia begins the transition to a low carbon economy.”
”This is possibly a game-changer for renewable energy for Australia. But the key is this is probably the beginning of a long transition to a clean energy future.
You’ve got to think that the introduction of a carbon price with all those supporting policies will be very positive for investment in renewable energy.
What we believe is that putting these in place will: a) there will be the benefit from the programs themselves; and secondly there will be the investment certainty that will allow us to go ahead with our projects that we’ve currently been holding back on.”
”Millions of Australians will be worse off. And we will not actually cut emissions. This is a Labor-Green carbon tax, it will drive up prices, threaten jobs, and do nothing at all for the environment. This tax is going to go up and up and up as time goes by. I think this package is going to compound the trust problem that has dogged the prime minister.
This package certainly sets up the next election to be a referendum on the carbon tax.”
“This is the moment where Australia turns its back on the fossil fuel age, and turns its face toward the greatest challenge of the 21st century, and that is addressing global warming.”
“This today is a world-leading outcome. It is going to lead to better outcomes at Durban and for the next international conference on climate change.”
“It’s a sensible scheme from a political point of view, but it’s hard to see how this is going to drive actual, quantifiable emissions reductions. What is it going to drive as there is no real price motivations?”
“It levels the playing fields for New Zealand industries competing in Australia. Longer term it looks good for a joint carbon market between the two countries.”
New Zealand foresters will certainly like the potential to sell their credits into the Australian market.”
”It’s a very good package, a vital step forward which breaks the political investment and environmental deadlock.
I think investors have much greater confidence now to be investing in renewables and (less-polluting) closed-cycle gas.
Also the energy and carbon farming elements are very important as well. Getting on with integrating and having a national scheme for energy saving is very important, as is boosting the carbon farming industry and linking it to a carbon price.
There’s an undoubtable boost for momentum on global carbon pricing. Other countries will look at one of the most carbon polluting economies on the planet that has made one huge stride forward toward putting a price on carbon. That should be a boost for those who are calling for this everywhere from Japan, South Korea, South Africa through to the United States.”
NATHIAN FABIAN, INVESTOR GROUP ON CLIMATE CHANGE IN AUSTRALIA
”This is a transparent carbon pricing framework for the long term and we welcome it. The addition of the independent Climate Change Authority to recommend targets will ensure the science and economics get a fair hearing in future.
Investors also wanted to see a certain transition to a flexible price phase and this has been delivered.”
The CEFC (Clean Energy Finance Corporation) is a very promising addition to the package.
If the CEFC can focus on reducing investment risk and providing finance where the market will not invest, the CEFC could kick start substantial clean energy investment.”
DON HENRY, EXECUTIVE DIRECTOR, AUSTRALIAN CONSERVATION FOUNDATION
”Today’s package is so important because it lays the foundation for Australia to finally start seriously acting on climate change. This package is not perfect, but it is absolutely essential Australia gets started.
“The starting price of $23 per tonne of carbon pollution from 1 July 2012, rising by 2.5 per cent every year for three years, is less than ACF called for, but we welcome the establishment of an independent Climate Change Authority to recommend targets when the emissions trading scheme commences as a way of taking some of the partisan politics out of building a clean energy economy.”
DAVID SCHLOSBERG, PROFESSOR, DEPARTMENT OF GOVERNMENT AND INTERNATIONAL RELATIONS, UNIVERSITY OF SYDNEY
“The important thing is that Australia is actually doing something. It shows that the country is abiding by its commitment to do something as part of the original U.N. and part of Kyoto agreements to curb emissions. Australia is finally doing that It meets an obligation. It starts the ball rolling.”
PROFESSOR PETER NEWMAN, DIRECTOR OF CURTIN UNIVERSITY‘S SUSTAINABILITY POLICY (CUSP) INSTITUTE
“I think it’s fantastic that we have a climate change package which includes a carbon price for the front end of the economy and a range of end user initiatives to assist with the transition for households and businesses. It’s been a painful process but an historic day now that we have the package.”
Reporting by Australia/NZ bureaux and David Fogarty in Singapore