The big news out of Australia today is that a carbon tax is on track to pass into law, after making it through in the lower house of Parliament. Debates over climate policy have brought down previous governments in the country, which relies heavily on coal and is the largest per-capita carbon polluter on the planet. All of the sudden, though, Australia’s poised to pass a carbon scheme that’s arguably as ambitious as Europe’s or California’s — a $23 per ton carbon tax that will be replaced with a cap-and-trade system in 2015. How did this all happen?
The new proposal, by contrast, is built around a clever tax swap. As Quiggin puts it, “More important is the use of the bulk of the proceeds to raise the income tax threshold from (around) $6000 to $20000, thereby taking a million or so people out of the income tax system.” The idea is simple: Reduce taxes on something you want (incomes) and raise taxes on something you’d like to see less of (carbon pollution). It’s an idea that many carbon-tax advocates have suggested here in the United States — Al Gore, for instance, has suggested replacing a portion of payroll taxes with a straight carbon fee.
Now, Australia’s carbon policy still had to be stretched and contorted in a variety of ways to make it politically palatable. The emissions caps will exempt the farming and agriculture sectors. The tax doesn’t affect the price of gasoline for drivers — although rail and shipping companies will pay taxes on diesel. And the carbon tax doesn’t block or slow Australia from shipping coal overseas. Coal makes up one-quarter of the country’s exports, which go off to countries like China and are a major contributor to climate change.
Still, as Quiggin notes, the carbon tax should encourage Australia’s power plants to use less lignite (brown coal) in favor of anthracite (black coal), which produces fewer emissions when burned, due to its lower moisture content. Indeed, some of Australia’s coal plants are still notoriously inefficient: Hazelwood Power Station in Victoria, for instance, has been ranked the least carbon-efficient power plant in the world. In theory, a carbon tax should slowly force changes there. (Some observers expect the Hazelwood plant to shut down in response to the tax.)
It’s also worth noting that, in recent years, Australia has been hit especially hard by exactly the sort of natural disasters that tend to get people nervous about global warming. Here’s Jeff Goodell: “In 2009, wildfires in Australia torched more than a million acres and killed 173 people. The Murray-Darling Basin, which serves as the country’s breadbasket, has suffered a decades-long drought, and what water is left is becoming increasingly salty and unusable, raising the question of whether Australia, long a major food exporter, will be able to feed itself in the coming decades. The oceans are getting warmer and more acidic, leading to the all-but-certain death of the Great Barrier Reef within 40 years.” That’s the sort of thing that can nudge climate policy along in a hurry.