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Australia’s Carbon Price Passes Senate; Seeks ETS Link With EU And NZ

Australian carbon price supporters

After 4 years of heated political debate, Australia’s controversial carbon pricing scheme will finally become law after a landmark vote from the Australian Senate on Tuesday. Following the vote, Australian Prime Minister Julia Gillard declared victory for an “historic economic reform” which passed the upper house with a vote of 36 to 32.

The new carbon pricing scheme will first consist of a $23 a tonne carbon tax on Australia’s 500 biggest emitters, which will start July 2012. Half of the revenue generated from the carbon tax will be returned to households in the form of tax cuts, pension payments, and family payments to compensate them for higher electricity prices as utilities take on the tax.

Then starting in July 2015, the companies will enter into an emissions trading scheme (ETS) where they will need a permit per tonne of carbon they plan to emit.

Although the ETS will initially only apply to Australian businesses, Gillard seeks a global price on carbon emissions. “We do want to see international linking of global carbon markets, so that’s a very important part of the scheme,” she said.

In fact, Australia has already begun talks to link its carbon market with those in the EU and New Zealand. The country further hopes that the successful passage of its carbon pricing scheme will encourage other countries to embrace emission reduction policies in the upcoming climate talks in Durban.

However, although Australia’s carbon pricing scheme has now become law, its fate is not yet sealed. Opposition leader Tony Abbott has “pledged in blood” to repeal the legislation if elected. Although the next election won’t be held until 2013, a by-election for one of the seats could give Abbott enough seats to take power.

Currently, polls show support at 47% for Gillard and 53% for Abbott, but public support for Gillard has warmed recently due to her handling of economic and industrial relations problems.

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