February 7, 2012

Australia implements the carbon tax

On July 1st, 2012, Australia introduced a nationwide carbon tax following the paths of other countries. After several years of controversial debate, the levy has finally been passed to enforce a tax on the carbon content of fuels. The law forces about 300 of the worst-polluting firms to pay AUD$23 levy for every tonne of greenhouse gas that they produce. Arguably, the tax has been imposed to meet climate-change obligations in Australia which is the highest emitter per-head in the developed world.

This issue of pricing carbon emissions has been at the core of several government policies involving climate change. Enforcing the cost at AUD$23 per tonne, the aim is to gradually increase the price up until 2015 with the hope that it would then have shifted to a trading scheme allowing the market to set the cost. The idea behind imposing a carbon tax is seen as the most economically effective mechanism to reduce carbon output and thereby climate change.

Following the path of many countries, the idea of a Carbon tax was initially imposed in Finland in 1990. Following the introduction, the policy had been changed and modified intitially starting with several exemptions for specific fuels and sectors. Other countries and states that have enforced the carbon tax policy includes; Sweden (1991), Great Britain (2001), New Zealand (2005), Colorado, California and Maryland, United States (2007), Quebec and Alberta, Canada (2007) and British Columbia, Canada (2008), selective China states, India (2010), South Korea (2008), The Netherlands (1990, 2007), Norway (1991), Denmark (2002), Switzerland (2008), Ireland (2010).