Industry groups and economists have called for a carbon price closer to the current European Union market price.
The Australian government’s $23-per-tonne carbon tax policy will be introduced on July 1, leading to a floating market-driven emissions trading scheme (ETS) in 2015. The European Union market price is $10 per tonne.
The federal opposition has vowed to scrap the policy if it wins the federal election in 2013.
“It is clear there is a substantial gap between the international permit price and the starting price in our fixed price period, and this is a concern for the competitiveness of Australia’s industries and the impact this will have on our economy,” Jennifer Westacott, the Business Council of Australia chief executive, told The Australian.
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“Climate change is a global problem and will only be solved with a global solution. An effective, sustainable response to climate change is ultimately about moving from our current high-emission global economy, of which Australia is part, to a low-emission global economy,” a statement on the Business Council of Australia’s website says.
Part of former foreign minister Kevin Rudd’s pitch for the prime ministership on February 27 was to review the carbon tax after six months, and possibly to move earlier to the market-based ETS.
“It is in Australia’s national interest to have the price of carbon on July 1 starting at closer to $10 a ton,” former Reserve Bank board member professor Warwick McKibbin told The Australian.
The carbon price in Europe, the world’s biggest CO2 market, has plummeted 47% in the past year and today trades at about eight euros (about $AU10).