Australia Becomes First Country To Repeal Carbon Price — Too Bad It Was Working


On Thursday, after a week of upper house turmoil, Australian prime minister Tony Abbott’s Liberal-National Coalition in the Senate voted to scrap the country’s nascent carbon price and emissions trading scheme. This leaves Australia, one of the world’s biggest carbon emitters per capita with major coal deposits, without a direct path to reach the small but still challenging target of cutting greenhouse gas emissions five percent by 2020.

After a week in which mining magnate Clive Palmer’s Palmer United Party had rebuked Abbott’s efforts in a clear display of newfound relevance as they now hold the balance of power in the Senate, the PUP joined in and the Senate voted 39 to 32 to repeal the 2011 initiative.

Abbott has made repealing the tax a platform of his administration and cornerstone of his overall anti-climate, anti-clean energy agenda. He now plans to rely on a policy of Direct Action for the small five percent reduction in emissions that the government is still committed to. Through this currently unlegislated approach, the Abbott government will offer AUS$2.5 billion in grants over the next four years to companies and organizations that voluntarily reduce emissions.

After the repeal passed, Abbott celebrated the demise of the “useless, destructive [carbon] tax” and promised that the Coalition would “never do anything that damages the economy.”

In a statement, John Connor, CEO of The Climate Institute in Australia, called the repeal “an historic act of irresponsibility and recklessness.”

“With the Senate’s vote today, Australia not only lurches to the back of the pack of countries taking action on climate, but sees the responsibility of emission reductions shift from major polluters to the taxpayer,” said Connor. “The last seven years have been a sorry and sordid tale of greed, incompetence and rotten luck, which has reduced Australian policy making to scaremongering, self-interest and reckless short termism.”

Connor said that if there is any solace to be taken it’s that there is now two years of experience in Australia of carbon laws that have worked at reducing pollution in a growing economy.

Recent research by the Centre for Climate Economics & Policy at Australian National University found that the carbon price was performing well at its main job: delivering emissions cuts in the power sector.

“Besides helping to reduce power demand by households and industry, the carbon price has also had a strong effect on the relative costs of running different types of power plants, making highly polluting plants more expensive, and cleaner ones cheaper,” wrote Frank Jotzo, director of the Centre for Climate Economics & Policy.

During the carbon price’s first year, Australia’s emissions actually fell 0.8 percent, the largest fall in 24 years of records according to the Guardian. Since the tax began, emissions in the east coast electricity market have fallen 11 percent.

“Just like the Obama administration, future Australian governments may find that the politics of climate policy is too poisonous for a rational economic approach,” wrote Jotzo. “Perhaps a future government will find the courage to reinstate a wide-ranging price incentive to cut emissions. But one thing’s for sure: they had better not call it a ‘carbon tax.’”