Australia introduces carbon tax

Submitted by: Amanda Botes, Tuesday, July 3, 2012

Australia’s new carbon tax came into effect on 1st July 2012. Australia has introduced a carbon tax with the aim of reducing carbon emissions by 5% by 2020 (baseline year 2000) and moving from a coal based to a low carbon economy. Nearly 300of Australia’s top Green House Gas emitters are likely to be impacted by the tax, including companies and city councils.

Aus$23 per tonne of carbon

The Australian government has set the price of carbon at Aus$23 per tonne of carbon which equates to approximately R193 per tonne.  Comparatively this is higher than the cost of carbon currently traded in the European Union at €8.15 per tonne (roughly equal to R83), and higher than the R120 per tonne of carbon that has been proposed by the Treasury for a potential South African carbon tax.  The price of carbon in Australia will be fixed for a period of three years reaching Aus$25.40 in the third year. Thereafter the carbon price will be determined through a market based emissions trading scheme similar to that of the European Union.

Emission types covered by the carbon tax

Greenhouse gases covered in the Australian carbon tax include carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O) and perfluorocarbons. The tax covers carbon emissions from electricity generation, stationary energy, landfills, wastewater, industrial processes and fugitive emissions. The Australian carbon tax will only take Scope 1 emissions into account. Scope 1 emissions are direct emissions released from an activity such as fuel combustion for electricity.  Scope 2 emissions, which are indirect emissions from purchased electricity, will not be included. Scope 3 (indirect) emissions are also excluded. In addition emissions from agriculture and transport fuels will not be included in the carbon tax.

Which entities will be liable?

Australia’s largest polluters will be liable to pay the carbon tax. The following entities are required to pay the carbon tax:

1.       Direct emitters of more than 25,000 tonnes of CO2e in a financial year.

2.       Large gas consuming facilities that have combusted natural gas of more than 25,000 tonnes of CO2e in a financial year.

3.       Direct emitters responsible for a landfill facility that emits more than 25,000 tonnes of CO2e in a financial year.

The sectors most affected include mining, heavy manufacturing, power utilities and local councils. 


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Amanda Botes