Australian government unveils 2012 fixed carbon price strategy

Australia’s Labor government has proposed a fixed price carbon mechanism to be introduced in July 2012, paving the way to a future cap-and-trade system linked to the international carbon pricing market.
The country’s Prime Minister Julia Gillard announced the proposed carbon mechanism at a press conference today, which must still be passed by parliament before it is implemented.
The mechanism the government has proposed will fix the price of carbon for between three and five years, and will exclude emissions deriving from agriculture.
‘Agricultural emissions will not be included because the process of quantifying them is too complex,’ said Gillard. ‘We will continue to work with farmers to change their carbon-linked practices.’
Gillard said that the initial fixed carbon price and further details concerning the mechanism will be determined in subsequent discussions and submitted to the Multi-Party Climate Change Committee.
Australia is the world’s largest polluter per capita in the developed world, relying on coal for 80 per cent of its electricity.
The proposed carbon price will be subject to Labor’s ability to negotiate an agreement with a majority in both houses of parliament and pass legislation this year. The draft carbon mechanism legislation was launched in tandem with the Multi-Party Climate Change Committee.
The Multi-Party Climate Change Committee and non-government organisations and business roundtables on climate change will continue to discuss important elements of the proposal in the coming months, the Labor Party said on its website. ‘We will assure the carbon price is fair,’ said Gillard. ‘Carbon pollution is a threat to our country and future prosperity. We need to price carbon and ensure our economy is a low carbon economy. We cannot afford to be left behind.’
A majority of the money raised from charging businesses for carbon emissions will be used to fund climate change programmes and other social initiatives, Gillard told reporters.
In response to an anticipated fear campaign from the opposition party leader Tony Abbot, she said, ‘I am not intending to taka a backward step [on this],’ she said. ‘We are a market based economy a market-based mechanism is the best way to adapt to low carbon at the least cost.’
Gillard said, ‘A fixed price on carbon will be introduced for a period of between three to five years, followed by a smooth transition to full cap-and-trade system with flexible prices linked to global markets. This will be reviewed one year before the fixed period ends to assess possible reasons why not to move towards it.’