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Carbon price outlined

G-Online

The Federal Government has released its plans for putting a price on carbon pollution.

Solar future

The Carbon price package would “put solar on steroids” according to John Grimes, chief executive of the Australian Solar Energy Society.

Credit: iStockphoto

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Prime Minister Julia Gillard, Deputy Prime Minister and Treasurer Wayne Swan and Minister for Climate Change and Energy Efficiency Greg Combet unveiled the details of their carbon price yesterday.

“We know a carbon price is the most cost-efficient way to cut carbon pollution,” says Swan. “Putting a price on pollution will encourage companies to innovate and invest in new technologies to use energy more efficiently.”

The plan outlines a $23 carbon price starting 1 July 2012, rising by 2.5 per cent plus inflation every year during a three-year fixed price period. On 1 July 2015 there will be transition to an emissions trading scheme where the price is determined by the market.

Around 500 of the big polluters – including mining, cement, aviation and coal mining industries – would be expected to pay for every tonne of carbon pollution they put into the atmosphere.

The Gillard government’s carbon price legislation is expected to be passed in the last quarter of this year. Due to the current hung Parliament, the tax isn’t expected to have any trouble passing through parliament. However Opposition Leader Tony Abbott vowed in his response to the Prime Minister’s Address last night that he would roll back the tax if the Liberal Party won the next Federal election, due to be held before 30 November 2013.

What does the proposed plan mean for the environment?

The scheme is estimated to take 159 million tonnes of carbon pollution from the atmosphere by 2020, which Gillard said in her Address to the Nation last night is the equivalent of taking 45 million cars off the road.

Some environment groups say that more than just 500 polluters should be expected to pay a carbon price, particularly as petrol is not affected by the carbon price. However, it’s expected that the Government would invest in cleaner transport, like high speed rail and bicycle lanes to bring down transport emissions.

Renewable energies would be encouraged to grow through a $10 billion Clean Energy Finance Corporation, a $200 million Clean Technology Innovation Program and the newly-formed Australian Renewable Energy Agency. The chief executive of the Australian Solar Energy Society, John Grimes, said that the package would “put solar on steroids.”

Yesterday’s announcement was also supplemented with a Biodiversity Fund initially providing $946 million over six years for a range of projects to protect species from climate change impacts.

What does it mean for you?

Much of the revenue raised would be fed back to nine out of ten households through tax cuts, increased family payments and higher pensions, benefits and allowances. A new Clean Energy Supplement would be paid to people on pensions, allowances and family payments as a lump sum payment in advance during May-June 2012.

On average, household costs would increase $9.90 per week, but the average assistance offered is $10.10 a week. Households will be able to save more money through improving their energy efficiency, and products which are less carbon-intensive will become more relatively more affordable than those that are bigger polluters.

In addition, the tax-free threshold would increase from $6,000 to $18,200 from 1 July 2012, and then to $19,400 three years later – meaning over a million Australians would no longer need to lodge a tax return.