In Australia, the cost of a national carbon price has fallen dramatically since 2014, as more states have implemented the emissions trading scheme, a policy that has led to more than $1 trillion in emissions reduction over the past three years.
But that hasn’t stopped governments from increasing the price in the last three years, and some have increased the price of emissions permits to make up for it.
Now, with the carbon price now on track to be repealed in 2019, the ABC’s climate change correspondent Andrew Ferguson has been in Australia to find out what the best ways to pay for and keep the national price on track are.
What you need to know about the national carbon tax repealIn 2019, under the new Climate Change Authority (CCC) the carbon tax is expected to be abolished, with a new national carbon fee on top.
A new national price of $20 per tonne is also expected to follow.
“It is a really significant reduction, because the CCC’s carbon price, at $30 per tonnes, is one of the most expensive in the world, and the cheapest of any federal government policy,” Dr Ferguson said.
“That means it’s going to be really hard to offset that with a $20 price tag.”
If we are to keep a national price at the current rate, we will have to have about $30-40 per ton of CO2 emitted to make it a worthwhile price for Australians to be paying.
“But a number of countries have raised their carbon prices in the past few years, including the UK, Denmark, France and Norway, while others have set a lower national price.
The Australian Government has set the national CO2 price at $20.00 per ton, and Dr Ferguson’s analysis shows that it’s cheaper than the UK’s $30.00-per-ton.”
But that’s not good enough, because that’s just going to cost the government $20 more per ton to get the same level of emissions reductions,” he said.’
A very different approach’While there are many different ways of paying for a national COII price, one of Dr Ferguson and other climate scientists says it’s important to keep in mind the costs associated with it.”
The way we are trying to price carbon is different than the way that governments are actually trying to do it.
It’s a very different way of doing it,” he told the ABC.”
We need to be careful not to make any assumptions about what the costs are of a policy like that, because they are not as clear cut as you might think.
“So the question is how much it is going to save, how much is it going to increase CO2 emissions, and how much are we going to reduce CO2.”
He also said it was important to remember that the national cost of COII is only one of many costs that the government is responsible for.
“What we’re doing with our COII pricing is to be a cost-effective, effective carbon pricing system,” Dr Fergusson said.”[And] it is important to have that understanding.
It is not just about the CO2 and the carbon pricing mechanism.
We need to understand the social and economic impacts of the carbon market as well.”