globalEDGE Blog: Carbon Dioxide Tax in Australia

Carbon Dioxide Tax in Australia

Starting July 1, 2012, the biggest polluters in Australia will have to pay a pollution tax. The tax, AD 23 (USD 25) per ton will be charged to companies that produce at least 25,000 tons of carbon dioxide per year.

The reasoning behind the tax is that if companies have to pay for emission of the harmful gas, they would be forced to invest more money into research and development of cleaner energy sources. They will be forced to innovate and in turn reduce pollution. Furthermore, the prime minister said that more that 50% of the collected tax money would be used to compensate consumers, through tax cuts, for the higher price of energy.

It is a good solution to the problem with pollution; however consumers will feel the impact as consumer prices are expected to rise by about 1%. Furthermore, such a tax might damage the country's competitiveness in the global market. This is because Australia is a major coal exporter. Besides the European Union, Australia is the only other country that will impose taxes on carbon dioxide emission.  

The EU has been working towards reaching a global agreement to reduce greenhouse gas emissions. For example, in late 2008, the EU passed a package of emission cutting measures. The goal of the plan is to reduce gases by 20% within the decade, increase the amount of renewable energy sources, and cut overall energy consumption by relying more on biofuels and hydrogen. 

Another part of the strategy is to penalize companies that exceed CO2 emission limits and reward those who reduce them. The companies that want to exceed the limits have to buy permits from the more efficient companies.

The reason why more and more countries are at least considering imposing taxes on CO2 is because it is the gas most often blamed for global warming and climate changes. The goal of such initiatives is to protect the environment and a larger global involvement is necessary in order to expedite the process. 

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