The MPCCC has previously outlined a scheme including a three to five-year fixed carbon price followed by an emissions trading scheme (ETS) with a floating price. The MPCCC is now entering the final stages of negotiations and is due to release policy details in July.
This final report updates the Garnaut Climate Change Review published in 2008, and concludes a series of update papers released earlier this year. The update papers addressed a wide range of topics including:
The final report examines carbon measures internationally, considers governance issues and proposes sharing initial scheme revenue between households (55%), industry (35%) and R&D into renewable energy (10%).
Perhaps in light of the last three years of escalating policy debate, Professor Garnaut has separated politicians and future carbon policy considerations as much as possible by recommending three independent governance bodies to administer the proposed carbon price. He calls for:
Professor Garnaut highlights the importance of proper regulation, particularly in light of recent European ETS scandals, including tax fraud and the re-sale of used carbon credits. Good scheme governance would be key to the success of Australia's carbon policy, Garnaut writes.
Professor Garnaut suggests a starting carbon price of $26 per tonne which is estimated to bring in around $11.5 billion in 2012/13. In determining how this revenue would be shared, he argues that during the initial carbon tax phase, assistance to emissions intensive, trade exposed industries (EITEI) should be based on the 2009 Carbon Pollution Reduction Scheme arrangements, after removing the “global financial crisis buffer”. Following that time, EITEI assistance arrangements should be considered by an independent agency that monitors global carbon pricing to determine whether an economic justification for EITEI assistance remains.
The Productivity Commission’s report on international carbon pricing is due to be submitted to Government on 31 May and is expected to be made public in the following weeks. The Federal Government has committed to releasing details of its carbon policy by July 1.
Companies affected by carbon liability and companies interested in carbon trading opportunities.
Consider your carbon strategy and major investment decisions in light of a potential carbon price commencing July 2012.