PM Announces Details of Australian Carbon Price

10 July 2011

Prime Minister Julia Gillard today announced the details of the Australian Government’s plan to reduce carbon emissions and boost clean energy and technology development.

The wide ranging plan, entitled Securing a Clean Energy Future, will take effect from July 2012. The announcement comes after months of negotiations led by the Multi Party Climate Change Committee. 

The key points of the package include:

  • A fixed price of $23 per tonne for 3 years, rising by 2.5 per cent each year
  • The scheme applies to the 500 biggest polluters
  • The fixed price will be replaced by a market based price as of July 2015, with an overall cap on emissions
  • The market based price will have a price floor and ceiling
  • CPI is expected to rise by 0.7 per cent in 2012 due to the carbon price

Clean energy support

  • The Clean Energy Finance Corporation will be created with $10 billion of funding to invest in renewable energy schemes.
  • Existing $3.2billion government funding will be consolidated and administered by the newly created Australian Renewable Energy Agency
  • A grant program will provide funding for community energy efficiency programs
  • There will be a negotiated closure of 2000 Megawatts of the most polluting power stations by 2020


  • A new independent Climate Change Authority will advise on the setting of an overall emissions cap and other measures to meet emissions targets as in the UK. The final decision on any future cap will rest with Parliament.

Household and industry assistance

  • More than 50 per cent of the revenue from the scheme will go directly to households, via tax cuts and additional welfare payments
  • The tax-free threshold will triple to over $18,000, a reform that will take around 1 million low income earners out of the income tax system
  • Average household costs will rise by $9.90 per week with average compensation of $10.10 per week
  • $9.2 billion allocated over the first three years for industry assistance
  • Trade exposed industries will get 94/5 per cent of permits for free
  • $1.3 billion will go into a coal sector jobs package to help those mines most affected
  • $300 million will be put aside to help the steel industry transition

Caroline Bayliss, The Australia Director of The Climate Group, welcomed the plan:

“This package is the first big step towards a clean economic and technological revolution that is the only way of securing long term prosperity and quality of life for Australians. It is more than a carbon tax - it is a comprehensive suite of measures that together can not only reduce our emissions, but also encourage growth of innovative, green technologies, industries and jobs.”

“This puts a significant stake in the ground for our economy - as of July next year, emitting carbon will come at a cost. Businesses now have an incentive to start innovating to reduce their emissions where it is cheapest and most efficient.”

“Once this scheme passes parliament it will bring much needed certainty to business, which is crucial to getting the investment we need to accelerate and scale up the renewable energy and energy efficiency measures that will transform Australia to a low carbon economy.”

"The governance arrangements set out are both positive and pragmatic. The Climate Change Authority will remove the running of the scheme from day to day political pressures and ensure independence in the advice to government about the overall cap on emissions past 2015. Similar arrangements in the UK are working well and have led to some very ambitious targets there, which have attracted bipartisan political support. Hopefully the same will happen here.”

“The upping of the 2050 emissions reduction target to 80 per cent is also a welcome step and a timely reminder of what is ultimately needed.”

“The announcement means that Australia’s current 5 per cent reduction target by 2020 is underpinned by serious policy which can actually get us there. That has to be good news. However, the impact of this for international negotiations will be limited, as our current target is well below where it should be and lags behind the commitments of other countries, like those in the EU.”


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