Carbon pricing in Australia

by John Q on July 20, 2013

A number of people have asked me about the recent move by newly restored PM Kevin Rudd to “terminate the carbon tax”. I’ve given some of the political background here, explaining why the term “carbon tax” has become politically toxic in Australia. In this post, I’m going to try to spell out the story a bit more.[^1] There’s more detail here, but I’ll make the crucial points up front

* Australia never had a carbon tax, as the term is usually understood. Rather, we had an emissions permit scheme, with a period of fixed prices (initially until 2016) after which emissions would be tradable
* In 2012, it was agreed to link our scheme to the EU Emissions Trading Scheme, beginning in 2015. This didn’t attract attention, and legislation was passed to put the link into effect
* Following his restoration, Rudd announced that the link would be brought forward to 2014. To undercut the Opposition, which had been waging a campaign to “Axe the Tax”, he described this as “terminating the carbon tax”

The initial fixed price was set at $23/tonne which was, at the time, a plausible estimate of the likely price of emissions in the EU scheme. Despite dire predictions the carbon price had no visible impact on the economy except the desired one of reducing emissions. However, as it turned out, EU prices have been much lower than the Australian price, making a link to the EU a cheap way of meeting Australian targets for emissions, net of imported permits.

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The claim that the secession of the Confederate states was driven, in large measure, by economic disputes over tariffs, rather than by the more obvious fact that the US had just elected an anti-slavery president, has come up in comments to Corey’s post. My impression is that this claim has been advanced both by neo-confederates on the right and by Marxisant writers in the tradition of Charles and Mary Beard, but I’ll leave it to those more qualified to set me straight if I’m wrong on this.

I wanted to point interested readers to Australia’s experience with a secessionist movement driven by concerns about tariff policy.
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