Carbon Price Mechanism

23rd February 2011

Today the Prime Minister, The Hon Julia Gillard MP, together with members of the Multi-Party Climate Change Committee (MPCCC), announced a draft carbon price mechanism proposal for community consultation. 

The MPCCC’s proposal includes a fixed price on carbon from 1 July 2012.  This would be in place for between three and five years before transitioning to an emissions trading scheme with a  flexible price on carbon, allowing the government to set and meet carbon emission targets for 2020. 

The architecture released by the MPCCC allows for the deferment of the flexible price arrangements 12 months before the end of the fixed price phase.  This would allow the transition to take into account international movements in carbon pricing (including Australia’s internationally agreed targets, and whether international prices were lower than the fixed price).

The MPCCC’s proposal suggests that the carbon price mechanism could have broad coverage of emissions sources, but that emissions from sources under the proposed Carbon Farming Initiative would be excluded.

The Prime Minister emphasised the need to deliver action on climate change now, because “the longer we wait, the greater the cost to the economy, and the greater the cost to Australian jobs.”  She also acknowledged that while the introduction of a carbon price will affect all Australian households and communities, the Federal Government remains committed to delivering fairness to the community, including assistance to people dealing with cost-of-living pressure.  More detail on the architecture of the proposal can be found here.

The Minister for Climate Change and Energy Efficiency, The Hon Greg Combet MP, explained that the proposal will deliver certainty for the business community and provides an opportunity for discussion before the detail is finalised.

Leader of the Australian Greens, Senator Bob Brown stated that the discussion process was on track and that the committee had been able to agree on a hybrid model developed from the recommendations of Professor Ross Garnaut.

Independent MP Tony Windsor emphasised that there was still a lot of detail that needed to be worked through and that for him all options are still on the table, while Independent MP Rob Oakeshott was very positive about the proposal, and declared  that he is focused on achieving a strong climate change outcome.

This release is the second from the MPCCC, which was set up in October 2010 to build consensus over how Australia should tackle Climate Change. 

For more information on the Gillard Government’s Climate Change Policy, see Hawker Britton’s Occasional Paper, found here.

hawker britton