Stronger targets proposed in Climate Change Authority draft report

Image source: Climate Change Authority

Today the Climate Change Authority (CCA) released a draft version of its ‘Targets and Progress Review’. The review, which according to the Clean Energy Act 2011 must be finalised by 28 February 2014, is to be used by the Minister in determining Australia’s emissions reduction goals under the carbon price mechanism. The draft report proposes two sets of caps; each set of caps defines a different emissions trajectory between now and 2020, and then to 2030. The CCA is calling for stakeholder input until 29 November 2013.

Countries trading greenhouse gas emissions

Over the last three years, the global carbon market has more than doubled in volume but almost halved in value. In that time a further eight countries, states or cities have adopted a carbon market as their primary means for reducing greenhouse gas emissions. Yet the price for one tonne of carbon dioxide equivalent has dropped by as much as 100 per cent in some markets.

A new paper from the Parliamentary Library provides a basic overview of the size and value of the global carbon market and details exactly which countries and regions are covered by a mandatory emissions trading scheme (ETS). Here is a snapshot of that paper.

Carbon pricing mechanism—personal income tax reform

Image source: yourhome.gov.au

As part of its Clean Energy Future package, the Government has announced a series of personal income taxation reforms. This will involve increases to the marginal taxation rates in 2012-13 and 2015-16, as well as changes to the tax free threshold and low income tax offset.

The Parliamentary Library has prepared a brief on the proposed changes, which is available on its climate change website. The brief presents the details of the proposed tax reform, compares it to the personal income tax reform proposed by the Australia's Future Tax System review, and presents the changes to the marginal income taxation rates and thresholds since 1983-84.

Carbon Pricing Mechanism—editorials and opinion pieces

Image source: National Library of Australia

For easy access to commentary on the Carbon Pricing Mechanism, the Parliamentary Library has prepared a page of press editorials and opinion pieces following the Government’s announcement of its Clean Energy Plan on Sunday 10 July 2011. The page covers the week following the announcement, that is, from Monday 12 July 2011 to Friday 15 July 2011, and contains newspapers representing all the states and territories. The press editorial and opinion pieces page and other information on the Carbon Pricing Mechanism are available on the Parliamentary Library's climate change website.
The press editorials and opinion pieces page is only available to Senators and Members and their staff. The Parliamentary Library's climate change website and briefs on the Carbon Pricing Mechanism are available to the general public.

Carbon Pricing Mechanism—Assistance to welfare recipients

(Image: Clean Energy Future website)

The Government has announced a package of measures aimed at providing assistance to households to compensate for the cost of living impact of the carbon price. Assistance will be delivered through permanent increases to welfare payments and tax cuts. The Parliamentary Library has published a short brief outlining the assistance provided to welfare recipients.

The brief notes that, according to the Government’s modelling, welfare recipients will be overcompensated for the expected cost of living impact of the carbon price. Indeed, it appears that welfare recipients will also effectively be compensated more than once when normal processes of payment indexation are taken into account. The brief also notes that pensioners receive more assistance than other welfare recipients (such as jobseekers) and that this essentially reflects the fact the current differences in rates of payment between different categories of welfare recipient.

Carbon Pricing Mechanism—CPRS and Carbon Pricing Mechanism: comparison of selected features



Image source: Treasury



Image source: Clean Energy Future website



To assist comparison of the previous Carbon Pollution Reduction Scheme and the proposed Carbon Pricing Mechanism, the Parliamentary Library has prepared a table of selected features from each scheme. The table shows side-by-side the architecture of each scheme in relation to coverage, caps, permit prices, international linkages, impact on the Budget, household and industry assistance and compensation, and more. Other briefs on the Carbon Pricing Mechanism are available from the Parliamentary Library's climate change website.

Carbon Pricing Mechanism—Which 500 companies pay the tax?

Image source: NSW Government

The Government has been clear that only Australia’s 500 biggest ‘carbon polluters’ will be directly affected by the proposed Carbon Pricing Mechanism (CPM). This is down from the 1000 that would have been liable under the previous Carbon Pollution Reduction Scheme, mainly due to the exclusion of fuels from the CPM. There has been some speculation as to which companies would be included in the Government’s list of 500, and which ones are Australia’s ‘top 50 carbon polluters’. The Parliamentary Library has published a short brief with some information on determining which corporations are likely to be included, and an explanation on why a definite list of 500 companies is not publicly available.

Carbon Pricing Mechanism



Image source: Clean Energy Future website

On Sunday 10 July 2011, the Australian Government released the Clean Energy Plan, a package of measures that includes a Carbon Pricing Mechanism. The policy is the outcome of several months of consideration by the Multi-Party Climate Change Committee (MPCCC), which was established after the 2010 election to determine key elements and complementary measures needed for an Australian carbon price. The scheme, to start in 2012, borrows some definitions and decisions of the Carbon Pollution Reduction Scheme but outlines a new emissions trading scheme starting with a three-year fixed price term. The policy's development was based on information provided by the Garnaut Climate Change Review Update, and scientific advice provided by expert advisors to the MPCCC.

Over the coming days and weeks, the Parliamentary Library will be publishing FlagPosts on specific issues relating to the Government's proposed carbon pricing scheme. Useful information and background on climate change can also be obtained from the Parliamentary Library's climate change website. Stay tuned...