Carbon tax passes Senate

Prime Minister Julia Gillard said the passing of the Clean Energy legislation through the Senate was a major milestone in Australia’s efforts to cut carbon pollution and seize the economic and job opportunities of the future.

From July 2012, Australia’s biggest polluters will have to pay for every tonne of carbon pollution they emit, which will deliver: a cut to carbon pollution of at least 160 million tonnes a year in 2020; tax cuts and increases to household payments and pensions for millions of Australians; and, a clean energy economy with new economic opportunities and clean energy jobs.

The Clean Energy plan will cut carbon pollution by at least 160 million tonnes a year in 2020 - the equivalent of taking 45 million cars off the road, said Gillard in a joint media statement with the Deputy Prime Minister and Treasurer Wayne Swan, and Climate Change and Energy Efficiency Minister Greg Combat.

Deputy Prime Minister and Treasurer Wayne Swan said the 18 Bills comprising the Clean Energy legislative package represented one of the most important economic reforms in the nation’s history. Treasury modelling shows the Gillard Government’s carbon price will reduce emissions and drive investment in clean energy while ensuring the economy continues to prosper, with 1.6m jobs to be created by 2020.

Minister for Climate Change and Energy Efficiency Greg Combet said the carbon price mechanism would apply to around 500 of the country’s biggest polluters. It is a charge on pollution, not a tax on households or small businesses.The initial fixed price stage will provide stability and predictability. This will give businesses time to get used to the new system, to understand their obligations and to start planning ways of reducing their pollution. Passage of the legislation means the government will now focus on implementing the carbon price and delivering the substantial household, industry, renewable energy, innovation, land sector and energy-efficiency measures contained in the Clean Energy Future Plan.

The key government policies for delivering the transformation are:

• The expanded Renewable Energy Target. This will ensure that the equivalent of 20% of Australia’s electricity comes from renewable sources by 2020. The RET is already driving a significant expansion in renewable energy.
• Introducing a carbon price from 1 July 2012. This will create powerful economic incentives for further growth in renewable energy. Putting a price on carbon pollution will increase demand for alternative energy sources. It will give businesses a financial incentive to reduce emissions in producing and consuming energy. Carbon pricing will also spur investors, innovators and entrepreneurs to develop and bring new renewable energy technologies to the marketplace.
• Creating a new statutory body, the Australian Renewable Energy Agency (ARENA) will administer $3.2bn in government support for research and development, demonstration and commercialisation of renewable energy technologies. It will provide independent, efficient and streamlined administration of funding for projects that strengthen renewable energy and enabling technologies.
• Establishing a new commercially oriented Clean Energy Finance Corporation. The CEFC will have $10bn in funds available to invest in businesses seeking to get innovative clean energy proposals and technologies off the ground. It will encourage private sector investment and help overcome capital market barriers to commercialising clean energy technologies. The government has appointed Reserve Bank board member and experienced businesswoman Jillian Broadbent AO to chair an expert review to report on an investment mandate, risk management approach and governance arrangements for the CEFC. Legislation to establish the CEFC will be introduced into Parliament next year.

The government is boosting clean and renewable energy through the new $10bn Clean Energy Finance Corporation. The Clean Energy Finance Corporation will assist businesses seeking funds to get innovative clean energy proposals and technologies off the ground and commercialise clean energy projects. A great deal of this investment is expected to flow through to regional and rural Australia.

From small business to large industry, businesses will be assisted in transitioning to a clean energy future. About 40% of money raised from the carbon price will help businesses and support jobs. A Jobs and Competitiveness Program will provide $9.2bn of assistance over the first three years of the carbon pricing mechanism to safeguard jobs in industries which face international competition and produce a lot of pollution. While small businesses will not be directly liable for the carbon price, the government will introduce measures to assist small firms with the transition to a clean energy future. This assistance will include increasing the small business instant asset write-off threshold to $6500 to free up cash flow and help small business owners invest in new assets, including those that improve energy efficiency.

The manufacturing industry will be assisted by tailored programs worth $500m for steel manufacturers, food processors and metal foundries and forgers. An $800m grants program will help manufacturers invest in low-pollution technologies. A Coal Sector Jobs Package will provide $1.3bn in assistance to support coal mining jobs.

The $800m Clean Technology Investment Program will provide grants to manufacturers to support investments in energy-efficient capital equipment and low-pollution technologies, processes and products. These grants will provide practical assistance to manufacturing businesses, while supporting the incentives created by the carbon price to improve energy efficiency or use of energy from cleaner sources.

Manufacturing businesses with facilities that use more than 300 megawatt hours of electricity or five terajoules of natural gas a year, or are covered by the carbon pricing mechanism, will be eligible to apply for grants under this program. Funding will be provided on a co-investment basis, with industry contributing on average three dollars for every dollar from the government. This investment will help modernise parts of the Australian manufacturing sector and help manufacturers compete in a low-pollution world, with benefits for the job security of manufacturing workers.

The government will also provide assistance worth $300 million over four years to encourage investment and innovation in the Australian steel manufacturing industry through the Steel Transformation Plan. This is aimed at helping the sector transform into an increasingly efficient and economically sustainable industry in a low-pollution economy.

Separately, the $1.3bn Coal Sector Jobs Package will provide transitional assistance to help the coal industry to implement carbon abatement technologies for the mines that produce the most carbon pollution. The amount of carbon pollution produced by coal mines varies greatly, so the fairest way to deliver assistance is to target assistance at those mines that are most impacted by the introduction of the carbon price. The $70m Coal Mining Abatement Technology Support Package will provide support for the development and deployment of technologies to reduce fugitive emissions from coal mines. It will provide support for the research, development and deployment of abatement technologies in the coal sector. There will be an emphasis on assisting small to medium miners to reduce their emissions by implementing new abatement technologies, equipment and processes.