The Government’s recent announcement to bring forward the carbon credit trading scheme, to begin from 1 July 2014, has a number of ramifications for households and businesses alike. Although specific details of the proposal have not yet been released (and by all accounts, legislation with respect to these changes may be some way off yet), it appears as though the effect will be as follows:
- According to the Government, households will be slightly better off, although the opposition’s modelling suggests otherwise.
- The cost of carbon will fall from $24 per tonne to approximately $6 per tonne, in line with the current cost of European carbon credits. This is good news for the large industrial companies and miners however there is conjecture between the Government and the opposition regarding where the price of carbon will end up over the next few years. The opposition suggests that the price will climb, by deliberate design, back up to and beyond the current $24 per tonne, hurting business in the longer run.
Perhaps most importantly is how the Government proposes to plug the revenue gap to be created as a result of the reduction in the carbon tax price. Not a lot has been reported on the topic thus far, however it appears, as the Prime Minister stated in his announcement, that a number of green related measures and initiatives will be either severely cut back or axed. These include:
- The Biodiversity Fund - $213 million;
- The Carbon Farming Initiative - $143 million; and
- The Clean Technology Program - $362 million.
Businesses saw these initiatives as the “opportunity” side of the carbon tax, intended to promote alternative, clean energy ideas. Farmers were considering how to get involved with the carbon farming initiative, for example. Although a number of businesses and projects did benefit, the fear is that the cuts to these green initiatives will result in a severe reduction in activity in the clean energy space.