Australia's Carbon Tax: A Sheep in Wolf's Clothing?

Abstract

The Australian Government has produced a CO2-equivalent tax proposal with a difference: it is a short prelude to an emission trading scheme that will allow the increasing rate of emissions to continue, while being a net cost to the Treasury. That cost extends to allowing major emitters to make guaranteed windfall profits from pollution permits. The emission trading scheme suffers numerous problems, but the issues raised in this article show that taxes can also be watered down and made ineffectual through concessions. Taxpayers will get no assets from the billions of dollars to be spent buying-off the coal generators or other polluters. The scheme seeks to stimulate private investors to create an additional 12 per cent in renewable electricity generation by 2020. A really serious emissions reducing alternative would need to create a nationalised electricity sector with 100 per cent renewable energy within a decade. We explore the limitations of Australia's carbon tax plan which has now passed into law.