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Turnbull Shoots Down Australian Carbon Tax Suggestion

by Mary Swire, Tax-News.com, Hong Kong

14 December 2016


Restoring a carbon tax or an emissions trading scheme is not part of the federal Government's policy, Australian Prime Minister Malcolm Turnbull has said.

Turnbull made the comment during a December 9 press conference to mark the conclusion of the Council of Australian Governments (COAG) meeting.

According to a communique, the heads of Australia's federal, state, and territory governments agreed that they "must prioritize energy security, reliability, and affordability as the electricity sector transitions to low emissions technologies," and that the sector has an important role to play in meeting Australia's commitments under the Paris Agreement.

At the meeting, Australia's Chief Scientist, Dr Alan Finkel, presented the preliminary report of the National Electricity Market Security Review. It warned that the security and reliability of Australia's electricity supply is less assured than in the past, and that household energy bills rose on average almost 50 percent (inflation adjusted) in the six years to 2014. It also concluded that there is "broad enthusiasm for a coordinated national approach to energy and emissions reduction policies."

The preliminary report noted that recent research by the Australian Energy Market Commission and the Australian Energy Market Operator for COAG had found that the option of an emissions intensity scheme (EIS) "best integrated with the electricity market's pricing and risk management framework, had the lowest economic costs, and the lowest impact on electricity prices." Under an EIS, an emissions intensity baseline would be established for the generation sector. Power stations generating electricity above the baseline would be required to purchase credits, while less emissions intensive power stations would receive credits, which they could sell.

The report stated that for Australia to meet its emissions reductions targets, there will need to be "stable and effective emissions reduction policies to support the necessary investment in long-lived generation and network assets while maintaining security and reliability."

Responding to Finkel's preliminary report, Turnbull said: "There are a lot of issues that we have to work through but I can tell you that restoring a carbon tax or an emissions trading scheme is not part of our policy." Turnbull added: "I know it's always appealing to have instant answers but we are not going to undertake steps which will increase the cost of electricity for Australian families, for Australian businesses, and imposing a tax on electricity generation, which is essentially what is being proposed, would add to the cost, would add to that burden and that is, that is clear."

When prompted as to whether he would at the outset rule out a possible solution, Turnbull stressed that "we do not support a carbon tax or an emissions trading scheme."

TAGS: environment | Energy | tax | investment | business | energy | Australia | environmental tax | carbon tax | inflation

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