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Australia moves closer to law establishing carbon tax

October 11, 2011 |  7:25 pm

The Australian government's goal of implementing a carbon tax passed its toughest test today as the lower house of Parliament overwhelmingly approved a package of bills that institutes a phased-in carbon tax, to be followed by a carbon-trading system.

The 18 bills now go to the Senate, where the law is all but assured of passage in mid-November.

According to Prime Minister Julia Gillard, the system will reduce Australia's carbon emissions by 159 million tons by 2020. Australia is the largest per-capita carbon polluter, with an economy deeply dependent on coal.

The first phase of the law will tax carbon at $22.90 a ton beginning in the middle of next year. The surcharge will rise modestly until mid-2015, when the carbon-trading system will take effect. Other bills call for a national emissions caps, exempting farming and other agricultural sectors.

The tax will not extend to the price of gas for consumers, although rail, shipping and large trucking businesses will pay the tax indirectly on fuels such as diesel.

Australia’s biggest carbon emitters -- power companies, mining companies and industrial manufacturers -- immediately attacked the legislation, and the opposition leader, Tony Abbott, vowed a “pledge in blood” to repeal the law should he become prime minister.

The Australian law would go well beyond what the California Air Resources Board is considering. The board voted in August to reaffirm its cap-and-trade plan, which put the nation's first state carbon-trading program back on track.

California's on-again, off-again rules have been years in the making and are meant to complement AB 32, the state's landmark climate-change law that mandates a reduction in carbon pollution to 1990 levels by 2020. The air board adopted a preliminary carbon-trading plan in late 2008 but was sued by environmental justice groups in 2009.

The state plan calls for capping greenhouse gases at more than 600 industrial plants and allowing companies to buy and sell emissions permits. It is modeled on Europe's 6-year-old cap-and-trade system. California is considering whether to work with Canada under the Western Climate Initiative, a collaboration involving the U.S., Mexico and Canada.

California's program would be North America's biggest carbon market, three times larger than a utility-only system in 10 Northeastern states. By 2016, about $10 billion in carbon allowances are expected to be traded through the California market.


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-- Julie Cart

Photo: People walk across the frozen Songhua River near smokestacks at Jiamusi in China's Heilongjiang province in 2005. Credit: Greg Baker / Associated Press