Carbon Market in Australia

Australia will levy a carbon tax and thereby set the price of carbon for the Carbon Pricing Mechanism (CPM) that is to be initiated on July 1, 2012.1 The impact will only be on about one-half the number of companies originally expected which may limit the economic and political impact of the carbon tax.

Australia's Clean Energy Regulator has named 294 firms that will be liable for the A$23/tonne ($22.96/tonne) carbon tax, with electricity generators, steel makers and mining companies among the biggest emitters. The list was based on the largest emissions output.

The list is well short of the government's initial estimate that around 500 companies would be forced to pay to pollute under its carbon price legislation, designed to cut Australian carbon emissions to 95% of 2000 levels by 2020.

The government has already started a program to rebate the additional costs faced by  householders to compensate for the expected 0.7 percent inflationary impact of the scheme, and its largest impact on electricity prices.

Under the plan, the carbon price will be set at A$23/tonne for three years, before moving to a full trading scheme with a floating price from July, 2015.

As the world’s largest coal exporting nation, Australia is one of the world's biggest per-capita carbon emitters due to a heavy reliance on coal for 85 percent of electricity generation. At the same time Australia only accounts for an estimated 1.5% of global emissions.


1 See Frank Jotzo, Australia’s carbon price, Nature Climate Change 2. 475-476, 2012