Australia’s government moved on Tuesday to scrap its carbon tax and bring forward an emissions trading scheme in a policy shift to win over voters, angry over rising power costs, before an election expected within weeks.
Australian Prime Minister Kevin Rudd said he wants the fixed price on carbon emissions to end on June 30 next year. A floating carbon price, or emissions trading scheme (ETS) that will be linked to the European carbon market, will start the following day, a year earlier than planned.
On current prices, the shift would see the cost of carbon permits fall from the planned A$25.40 (US$23.40) per tonne from July next year to around A$6 per tonne, saving big businesses billions of dollars in carbon costs.
Rudd also said the change would slash A$3.8 billion from the federal budget over four years, but his government planned to make up the gap with savings of around A$3.9 billion from a range of measures.
The widely unpopular tax, blamed for rising electricity costs, was due to raise A$8.14 billion in 2013-2014 and A$8.6 billion in 2014-2015. Scrapping the plan would cut average household electricity and gas bills by A$4 a week, Rudd said.
“This is modest relief, but it is real,” Rudd told reporters at a media conference in Queensland state. The carbon tax, introduced by Rudd’s predecessor Julia Gillard as her central policy to cut carbon emissions, is currently set at A$24.15 a tonne.
It applies to about 300 of Australia’s biggest polluters, including mining giant BHP Billiton, Qantas Airways and BlueScope Steel, and 60 percent of the country’s 550 million tonnes of annual emissions.
Rudd’s new carbon plan relies on his center-left Labor party winning national elections, due between late August and November, and on receiving support from the minority Australian Greens party.