Cutting carbon dioxide emissions by using taxation is a growing method globally. The European Union employs this method, as does Australia and New Zealand. The United States has contemplated using carbon taxation but there is severe opposition to such a tactic in the U.S.. Now Australia has decided to team up with the EU, creating a burgeoning global carbon tax and trading scheme.
Creating a carbon tax market was a major move for the country as it is the world’s greatest per-capita polluter in the developed world, despite only producing 1.5 percent of emissions, and relies heavily on major emitters of carbon dioxide, such as coal. Australia is the world’s top coal exporter and approximately eighty percent of energy needs are met through the fossil fuel. Australia hopes to reduce carbon emissions by 159 million tons by the year 2020 through their carbon taxation.
Australia began their carbon taxation as of July 1, 2012. In order to force companies to reduce carbon emissions Australia will be imposing a $23 (Australian) per ton of emissions tax on 300 of their greatest polluters. Agricultural, forestry and land emissions are exempt from the new law. In three years, the tax will become an emissions trading scheme. Those most impacted by the new bill will be the mining, energy and airline industries. Fuel costs are expected to rise due to the impact on the industries. The A$23 per ton of emissions is higher than that used in the EU, which varies between $8.70 and $12.60.
Now Australia has announced that they will be joining the EU’s carbon trading market as of 2015, the year when Australia’s carbon taxation is set to become a trading scheme itself. The EU and Australia trading schemes will likely be entirely connected by July 2018. The partnership may signal the beginning of a global carbon trading market, a scheme which would likely reduce carbon emissions.
The cost of carbon per ton permits will be reduced for Australia, with both the EU and Australia paying the EU price of approximately $10 per ton. This aspect will likely win over some of the opposition currently disturbed with the carbon taxation in Australia. Australian companies may already purchase permits, however, they cannot trade them until 2015.
Connie Hedegaard, the EU Commissioner for Climate Action, stated: “We now look forward to the first full international linking of emission trading systems. […] It is further evidence of strong international cooperation on climate change and will build further momentum towards establishing a robust international carbon market.”