Overview of Carbon Price Package
- 12 July 2011
The Federal Government announced details of its Carbon Price package at noon on Sunday 10 July 2011. The proposals are intended to reduce carbon pollution and secure a clean energy future with a Renewable Energy Target of 20% by 2020.
In summary the Governments proposals are as follows:
- A carbon price of $23 for each tonne of pollution beginning 1 July 2012
- Prices are expected to rise by 2.5 % a year in real terms during three-year fixed period until 1 July 2015 then it is proposed Australia will transition to an emission trading scheme
- The price of each tonne will be fixed, like a carbon tax
It is forecast Australia will cut 159 million tonnes of carbon pollution from our atmosphere annually by 2020. Currently Australia is one of the top 20 polluters internationally. This market mechanism is aimed to reduce pollution in the economy. Although, it is proposed 60% of pollution will covered by the Carbon Price, this will not include agricultural sectors or light on-road vehicles. 500 large polluters will be obligated to pay for their carbon pollution.
The package includes:
- putting a price on carbon pollution
- promoting innovation and investment in renewable energy
- improving energy efficiency
- creating opportunities in the land sector to cut pollution
- reduction in electricity emissions by 60 % below current levels by 2050
- A carbon price of $23/t CO2-e in 2012-13 which will result in a one-off rise in the CPI of around 0.7%
- CO2-e reduction targets of at least 5 % below 2000-e levels by 2020 and 80 % below by 2050
- No international linking during the fixed carbon price period and only quality restrictions from 2015-16.
Households and Pensioners
It is intended no Australian will pay more tax as a result of these changes.
Although the average household costs increase will be $9.90 per week, assistance will be $10.10. This package will include:
- Household won't pay carbon price on fuel
- An increase in the income tax-free threshold from $6,000 to $18,200 from 1 July 2012 and to $19,400 from 1 July 2015
- All taxpayers earning up to $80,000 a year will get a tax cut, with most getting a cut of at least $300, a second round of cuts will increase saving to $380
- Almost six million households to receive assistance through tax cuts, extra payments or both and will be permanent
- Introduction of a Clean Energy Supplement - equal to 1.7% increase in pensions, allowances and family payments
- A $250 lump sum payment for a single pensioner before the carbon price begins
- 50% of assistance will flow to aged care providers while residents will get the remainder to assist with their day to day expenses
- Household advice line and website to provide advice on how you can improve energy efficiency to save money
Industry and Business
- Transport - from 2012-13:
- fuel tax credits will be reduced for businesses.
- Heavy on-road vehicles like semi-trailers will also initially be exempt from the fuel tax credit reductions.
- Domestic aviation fuel excise will be increased by an amount equivalent to the carbon price to provide an effective carbon price from 2012-13.
- A package of $9.2 billion over the first three years to support jobs and competitiveness in industries
- The pricing of carbon emissions is expected to slow average income growth by around 0.1 percentage point per year
- Small businesses will not have to count or monitor their carbon pollution or electricity use
- Energy Security Fund and Energy Security Council will be established
- Payment for closure - negotiate the closure or partial closure of some of Australia's most emissions intensive generators to remove up to 2,000 megawatts of capacity before 2020
- $10 billion Clean Energy Finance Corporation will be established
- Australian Renewable Energy Agency will independently administer $3.2 billion in existing Federal Government grants
- Climate Change Authority to be headed by Bernie Fraser
- $40 million Remote Indigenous Energy Program
- $200 million Food and Foundries Investment Program, farmers will not pay for their use of off-road fuel, 15% refundable tax offset for conservation tillage equipment
- Biodiversity Fund of $946 million over six years
- Low Carbon Communities Program to expand to $330 million to improve energy efficiency of council and community buildings and low-income households
- $40 million in energy efficiency information grants to industry associations and non-government organisation over four years