A Carbon Tax Down Under?: Australia’s lower house passes the controversial bill

Earlier this month, the lower house of Australia’s parliament (think House of Representatives) passed a series of bills, including the Clean Energy Bill 2011, by a vote of 74 to 72. The bill is known as the “carbon tax.” Starting in July of 2012, approximately 500 of the biggest emitters in the country will be required to pay A$23 (approximately $23 USD) per metric ton of carbon emissions they produce. Then in 2015, a market based trading system will take over.

Australia is the biggest exporter of coal in the world and approximately 80% of its electricity is generated by coal. It is one of the biggest per capita greenhouse gas emitting countries in the world. The bill’s goals include a 5% reduction in carbon emissions from the levels in 2000 by 2020 and an 80% reduction by the year 2050.

Prime Minister, Julia Gillard, pushed the bill and its companions, collectively the “Clean Energy Future bills,” forward with the support of the Greens. Included in the package was a bill providing for approximately $300 million in assistance to Australia’s steel industry. Although the bill passed this recent and significant hurdle and is expected to pass the Senate in November, the bill has been and continues to be very controversial and divisive. There have been widespread protests against it and it is blamed for the political demise of more than one prominent Australian politician. Supporters within the government say that offsets to increases in energy costs or other cost increases will come in the form of tax cuts or welfare increases for 90% of Australian households. However, industry groups have lobbied very hard against the law, stating that it will force companies to fire workers. Indeed, opposition party leader, Tony Abbott, has vowed to repeal the law if he is elected.

Will the law be a viable, long-term success story? Or will it be a short-lived failure? Will it encourage other nations or even states in the United States to move forward with carbon taxes or carbon trading schemes? Only time will tell.