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Australia Tax Repeal Is Big Blow To Fight Against CO2 Emissions

The New York Times

 Australia’s repeal of laws requiring large companies to pay for carbon emissions is among the starkest expressions worldwide of how economic concerns have complicated efforts to combat climate change. Analysts are viewing the move as a blow to plans for countries to knit together markets for trading emissions allowances.

After a long political battle over the costs of the Australian plan, the repeal won final legislative approval on Thursday with the strong backing of the conservative government of Prime Minister Tony Abbott. The plan, which was built around a tax on carbon emissions and was one of the most ambitious and prominent of its type, was a contentious issue in Australian politics since it was enacted by the previous center-left government in 2012.

Opposition politicians and environmentalists in Australia reacted with dismay, saying the move made Australia the first country to reverse progress on fighting climate change. It was also viewed with disappointment by proponents of establishing a global carbon-pricing system as the most effective way of reining in emissions. Australia is one of the world’s largest sources of carbon emissions, and its policies have been watched closely by other nations as they struggle to agree on ways to control global warming.

Australia’s system was of particular interest to other countries because it was to have been linked with a similar trading program in Europe.

Beginning next year, Australian businesses were to be able to buy European emissions allowances to use under the Australian program. A full two-way link between the two systems was to be in force by July 2018.

This arrangement would have connected Europe’s program, the world’s largest, to what looked likely to be the third-largest. The deal might have served as a pilot for linking other systems emerging around the world, including those in China and California.

“It is quite a setback to the global discussion of linking schemes and moving toward a global carbon market,” said Marcus Ferdinand, an analyst at Point Carbon, a research firm based in Oslo.

The Australian vote also further complicates long-running efforts by the United Nations to forge a global climate change treaty in 2015, aimed at committing the world’s largest economies to making deep cuts in their carbon pollution.

This fall, at the United Nations General Assembly in New York, government leaders are expected to lay out their proposed domestic commitments for that deal. Australia’s vote to gut its signature climate policy is likely to come under severe criticism at the meeting.

In Europe, officials expressed disappointment at Australia’s action.

“The European Union regrets the repeal of Australia’s carbon-pricing mechanism just as new carbon-pricing initiatives are emerging all around the world,” said the European climate action commissioner, Connie Hedegaard. “The E.U. is convinced that pricing carbon is not only the most cost-effective way to reduce emissions but also the tool to make the economic paradigm shift the world needs.”

The tax was devised to penalize hundreds of Australia’s biggest emitters of carbon, setting a price of 23 Australian dollars, or $21.50, per metric ton of carbon dioxide when it was put into effect in 2012, when Julia Gillard of the Labor Party was the prime minister. The price rose to 25 Australian dollars per metric ton this month.

Australia’s Senate voted 39 to 32 on Thursday to approve the repeal of the measure. The House of Representatives voted earlier in the week to repeal it.

Mr. Abbott, of the Liberal Party, who took office in September, made repealing the tax a central pledge of his election campaign, arguing that ending it would reduce electricity prices and enhance economic growth. But he struggled twice to get the measure through the Senate before the vote on Thursday.

The government now plans to introduce a range of measures that it says will encourage business to reduce pollution, rather than penalizing polluters.

After the vote on Thursday, Mr. Abbott characterized the tax as a “useless, destructive tax, which damaged jobs, which hurt families’ cost of living and which didn’t actually help the environment.” He called it a “9 percent impost on power prices, a $9 billion handbrake on our economy.”

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