1. Carbon price to start at $23 a ton
- basically what Garnaut recommended. And rising at 2.5% a year above inflation. About $1.30 a year I think (assuming 3% inflation).
- Note that the original CPRS was going to start with a introductory price of $10 a ton but then was expected to move to around $20-25 once it got fully underway).
2. Aim for a cut of 5% by 2020 and 80% by 2050.
-The 2020 target is quite low but by switching to a emissions trading scheme where the government caps the amount of pollution this could certainly be ramped up. The 80% target by 2050 is in line with the science.
3. Switch from a tax to emissions trading scheme in 2015.
-Again this is what Garnaut recommended, fixing the price at the start of the scheme will provide some certainty for business as every gets used to paying for carbon.
- The ETS will have a price floor of $15 (ie: the price won't be able to drop below this and will provide some certainty for investors).
4. The carbon tax will be levied at the 500 biggest polluters.
-They will then have an incentive reduce their emissions to reduce their bill. This will have a big effect on investment decisions especially when deciding on new electricity generation.
5. Price rises are predicted to be modest - 0.7% over the whole economy in 2012/2013
- Because polluters will pay more, many will pass on these costs to their customers. However the rises won't actually be that large, much smaller than GST for example.
- ie: About 80c a week rises in food prices
- Price rises for the average household are estimates to be $9.90/week but compensation will be $10.10/week
6. Most people will get compensation and be no worse off
- Tax free threshold will be tripled to $18 000 a year
- Pensioners and self-funded retirees will receive compensation
- I like these tax cuts, basically we are going to tax something we don't like (pollution) and tax something we do like less (work).
-Lower income households are expected to be about 20% better off. I guess the idea here was to make sure there are no nasty surprises for those who can least afford it.
7. Treasury modeling show that the earlier you start tackling climate change the cheaper and easier it is. Jobs and economic growth will see little effect. Economic growth will only by 0.1% lower than it otherwise would have been.
8. There is funding for renewable energy and energy efficiency
- The renewable energy fund is worth over 10 billion dollars.
- This appear to have two parts, the Australian Renewable Energy Agency will manage both which consists of:
~10 billions dollars in new money. Similar to a "Green bank" in that it will provide funding for renewable energy projects.
~3.2 billion in existing money for funding of R&D through to deployment will be also be managed by the AREA
All together this will help to get renewable energy plants built. A big positive and certainly much better than what was in the CPRS.
- There will be money for industry to make themselves more energy efficient. This will help to modernise industry making them more competitive and also reduce their emissions.
9. Emissions intensive and trade exposed industry's will get 94.5% compensation. Which will decrease slowly at 1.3% a year. There is also extra money for some areas like the steel industry.
10. There is money for carbon farming (sequestering carbon in trees and the land) and also for retiring the dirtiest coal fired power plants by 2020.
11. Offsets - Offsets are going to be allowed, including international offsets.
- Until 2015 when the ETS phase starts only domestic offsets will be allowed (ie: carbon farming, free planting etc)
- After 2015, up to 50% of emissions reductions can come from overseas. (This is considerably less than in the CPRS). Expect moves to link our ETS with that in NZ and the EU, one place we may see international offsets is in NZ forestry. Offsets in developing countries will likely also be allowed but the rules will need to be strict to make sure these are real and verifiable.
Overall, this is probably about the best that could be achieved when you needed the Greens and Tony Windsor to agree and some parts are better than I expected. I give it a pass mark.
For more information see ABC news here.
There is also a lot of detail on the policy on the Govt website Clean Energy Future.