NCPA - National Center for Policy Analysis

Worst Polluters to Pay for Carbon Dioxide Emissions

July 18, 2011

Australia will force its 500 worst polluters to pay 23 Australian dollars (US$25) for every ton of carbon dioxide they emit, with the government promising to compensate households hit with higher power bills under a plan to reduce greenhouse gas emissions unveiled Sunday, reports the Associated Press.

  • The government hopes businesses affected by the tax will seek out clean energy alternatives to reduce their bills.
  • The affected companies will have to pay AU$23 (US$24) per metric ton of carbon, with the price rising 2.5 percent a year until 2015, when the plan will move to a market-based emissions trading scheme.

The carbon tax is the government's main tool in meeting its pledge to reduce Australia's greenhouse gas emissions by the year 2020 to at least 5 percent below 2000 levels.  By then, the tax will have helped reduce carbon pollution by 160 million metric tons -- the equivalent of taking 45 million cars off the road, Prime Minister Julia Gillard says.

Critics of the plan say Australian households will be unfairly burdened by higher costs passed onto them by the big polluters.  To help compensate for the higher bills, nine out of 10 households will receive some kind of assistance in the form of income tax cuts and payments.  Two-thirds of all households will receive enough assistance to cover the entire financial impact of the tax, says Gillard.

  • Under the plan, the average household will see its costs increase by AU$9.90 (US$10.50) a week, which includes an additional AU$3.30 (US$3.50) per week for electricity and another AU$1.50 (US$1.59) a week for gas.
  • But the government says on average, households will receive AU$10.10 (US$10.72) a week in assistance.
  • Industries affected by the change will get AU$9.2 billion (US$9.76 billion) in compensation over the next three years, with the worst-hit businesses expected to be steel and aluminum manufacturers.

Source: Kristen Gelineau, "Australia to Tax Nation's Worst Polluters," Associated Press, July 10, 2011.


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