Government wants carbon tax by mid-2012

The Federal Government will aim for a fixed carbon price from July next year, which will apply to the trucking industry

By Brad Gardner | February 24, 2011

Trucking operators could be paying a fixed carbon price for five years from mid-2012 under a new climate change plan announced today by the Federal Government.

Prime Minister Julia Gillard has announced outcome of the Multi-Party Climate Change Committee, which involves the Government, Greens and independents.

The group proposes a fixed carbon price from July 1 next year that will run for between three to five years before being superseded by a cap and trade model.

A price has not yet been determined, but it will increase annually at a pre-determined rate. It will apply to all greenhouse gases, but agricultural emissions will be excluded.

"At the end of the fixed priced period, the clear intent would be that the scheme convert to a flexible price cap-and-trade emissions trading scheme," the communiqué from the committee says.

However, the document also suggests an option to defer the move to a cap and trade system, which will require businesses to by permits to emit greenhouse gases.

"A decision on whether to exercise the option to continue with a fixed price could be taken at least 12 months before the end of the fixed price phase. Unless there is a deferral, a particular 2020 target could be set no later than this date," the communiqué says.

The climate change committee says further detailed discussions will be needed to determine what the starting price should be. It has not yet discussed assistance packages for affected businesses and households.

Former Prime Minister Kevin Rudd attempted to introduce an emissions trading scheme before he abandoned the concept due to a lack of support.

Under Rudd’s scheme, the trucking industry would have received a one cent cut in the excise for every one cent rise in the price of fuel due to emissions trading. The scheme would have run for one year.

An emissions trading scheme would have forced fuel retailers to purchase permits to pollute and then to pass on the costs in the form of higher pump prices.

Opposition spokesman on transport Warren Truss yesterday sought confirmation from Treasurer Wayne Swan that a $10 carbon price will increase fuel by 2.5 cents a litre.

Swan says the figure – an estimate from the petroleum industry – cannot be confirmed and accused the Opposition of running a scare campaign. Swan says a carbon price is the best way to reduce emissions.

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