The passing of the legislation means that from 1 July 2012, a fixed carbon price of $A23 per tonne will apply, moving to a flexible price after three years.
More than half of the revenue raised will go to households in the form of increases in pensions, allowances and family payments that may receive income tax cuts on top of these increases.
Included in the Clean Energy package are the Mandatory Renewable Energy Target and the Jobs and Competitiveness Program. The latter will provide $A9.2 billion of assistance over the first three years of the carbon pricing mechanism, targeted at companies that produce a lot of carbon pollution but are constrained in their capacity to pass through costs in global markets.
The most emissions-intensive trade-exposed activities will receive assistance to cover 94.5 per cent of industry average carbon costs in the first year of the carbon price, with less emissions-intensive trade-exposed activities to receive assistance to cover 66 per cent of industry average carbon costs. Assistance will be reduced by 1.3 per cent each year to encourage industry to cut pollution.
Prime Minister Julia Gillard said the passing of the Clean Energy legislation through the Senate was a major milestone in Australia’s efforts to cut carbon pollution and seize the economic and job opportunities of the future.
Australian Deputy Prime Minister and Treasurer Wayne Swan said that Treasury modelling shows the carbon price will reduce emissions and drive investment in clean energy while ensuring the economy continues to prosper, with 1.6 million jobs to be created by 2020.
However, Australian Petroleum Production & Exploration Association (APPEA) Chief Executive David Byers warns that the local legislation may negatively impact Australia in the context of the global gas industry.
Mr Byers said “The legislation passed today represents an addition to the cost structure of Australian LNG exporters competing in global markets.
“It is important to recognise there is no global carbon price in operation. So while natural gas will be more competitive as an energy source for domestic power generation, Australia is imposing a cost on its industry that will not be borne by its major LNG competitors. This will diminish its international competitive standing.
“The Treasury modelling of the economic impacts of the move does not tell the full story. It understates the impacts of a domestic carbon price due to ‘courageous’ assumptions about future developments in global carbon policy that amount to ‘wishful thinking’.
“For every tonne of CO2 associated with the production, export and consumption of Australian LNG, up to 9.5 tonnes are avoided in customer countries when it is used in place of coal.
“APPEA encourages the Government to now take the opportunity to remove the 230 or so other policies and programs regulating greenhouse gas emissions in Australia.
“It is clear that the growth of disparate Australian, state, and territory government greenhouse initiatives, and their lack of consistency, are increasing costs and uncertainty for Australian industry.
“The plethora of regulatory and pseudo carbon pricing mechanisms – such as the Mandatory Renewable Energy Target – are no longer consistent with the Government’s stated policy intention and should now be removed.”
