Table of Contents

Carbon Pricing, Growth and the Environment

Carbon Pricing, Growth and the Environment

Critical Issues in Environmental Taxation series

Edited by Larry Kreiser, Ana Yábar Sterling, Pedro Herrera, Janet E. Milne and Hope Ashiabor

The emphasis of the book lies in finding critical solutions to global climate change including chapters on environmental fiscal reform and unemployment in Spain, EU structural and cohesion policy and sustainable development, ecological tax reform in Europe and Asia, Australia’s carbon pricing mechanism, and many other timely topics.

Chapter 17: Australia’s carbon pricing mechanism

Elena de Lemos Pinto Aydos

Subjects: economics and finance, environmental economics, public finance, environment, climate change, environmental economics, law - academic, tax law and fiscal policy


The Australian Parliament has recently passed a legislative package introducing a Federal emissions trading scheme (Carbon Pricing Mechanism) along with other strategies to cut pollution and drive investment in renewable energy sectors. Such strategies include support for innovation in renewable energy and low- pollution technology, an Energy Efficiency Program and land sector initiatives. The Carbon Pricing Mechanism has stoked political debate and controversy centred around the impacts of a carbon price to the international competitiveness of energy- intensive trade- exposed (EITE) industries, the risk of carbon leakage and the distributional impacts of the scheme on households. In response, the Government has developed a series of assistance programmes, including the Household Assistance Package, Jobs and Competitiveness Program, Steel Transformation Plan and Coal Sector Jobs Package. This chapter specifically focuses on the Jobs and Competitiveness Program. The chapter commences with a summary of the main features of Australia’s carbon pricing mechanism and then focuses on the assistance package to emissions intensive trade- exposed (EITE) industries, known as the Jobs and Competitiveness Program. A comparison of two different approaches to minimise carbon leakage and competitiveness concerns follows. In November 2011, a legislative package based on the Federal Government’s ‘Clean Energy Future’ Action Plan (Australian Government, 2011b) passed in Parliament, receiving Royal Assent in December 2011. The Clean Energy Act 2011 is the central legislation of the legislative package and it introduces an emissions trading scheme to commence on the 1 July 2012, named the Carbon Pricing Mechanism.

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