Prime Minister Julia Gillard, Deputy Prime Minister and Treasurer Wayne Swan and Minister for Climate Change and Energy Efficiency Greg Combet today announced the Australian Government's carbon price.
The carbon price will be $23 for each tonne of pollution beginning on 1 July 2012.
The price will rise by 2.5 per cent a year in real terms during a three-year fixed price period until 1 July 2015. The carbon price mechanism will then transition to an emissions trading scheme where the price will be determined by the market.
The Prime Minister said the carbon price was a central element of the Government's plan to move Australia to a clean energy future.
A carbon price will create economic incentives for the biggest polluters to reduce their emissions of greenhouse gases.
Around 500 businesses will be required to pay for their pollution under the carbon pricing mechanism, with more than half of this revenue used to assist households with tax cuts, increased family payments and higher pensions, benefits and allowances. Carbon price revenue will also be used to support jobs and to invest in clean energy and climate change programs.
Minister for Climate Change and Energy Efficiency Greg Combet said the Government's carbon pricing mechanism would be implemented in two stages.
For the first three years, starting from 1 July 2012, the price of each tonne of carbon pollution will be fixed, like a carbon tax.
Then, from 1 July 2015, the carbon pricing mechanism will move to an emissions trading scheme where the price will be set by the market.
Mr Combet said market mechanisms were the most environmentally effective and economically efficient way of reducing pollution.
A carbon price creates a competitive advantage for businesses, investors, researchers and innovators who find cleaner ways of doing business. In this way it creates powerful incentives and uses the market to deliver benefits for the community.
The Deputy Prime Minister and Treasurer Wayne Swan said the three-year fixed price period would provide stability and predictability across the economy.
It will give businesses time to understand the new system, their obligations within it and to start planning ways to reduce their pollution.
"We know a carbon price is the most cost-efficient way to cut carbon pollution."
"Putting a price on pollution will encourage companies to innovate and invest in new technologies to use energy more efficiently."
This is a significant reform that will tackle climate change and keep Australia's economy prosperous and competitive as the world moves to a clean energy future.
Further information about the Government's announcement of a carbon price and mechanism is available at www.cleanenergyfuture.gov.au.
10 July 2011