Australia Eyes Hefty Tax on Carbon Emissions

MELBOURNE, AUSTRALIA—After months of acrimonious debate, Australia's lower house of parliament on 12 October passed a carbon tax that is expected to transform the country's use of energy. Provided the measure passes the Senate next month, the tax "will restructure the economy to dramatically decrease its carbon intensity," says Snow Barlow, an agricultural scientist at the University of Melbourne.

A whopping 80% of Australia's electricity comes from burning coal—a figure that surpasses China and most other countries and has made Australia the developed world's highest per capita carbon dioxide emitter. The tax of Australian $23 (U.S. $23.4) per ton of emitted CO2 would apply to 500 of the biggest-polluting companies, which account for 60% of the country's CO2 emissions. It would operate over 3 years, increasing 2.5% per year, and segue into a carbon trading scheme in July 2015.

Analysts predict that by 2020, the tax would have cut emissions by 159 million tons, equating to a 5% emissions reduction. Some $24.5 billion (U.S. $24.9 billion) in tax revenues over 3 years would help endow a new $10 billion (U.S. $10.2 billion) Clean Energy Fund that is expected to provide a major boost to renewable energy. "It will bring to prominence Australia's special place in the world as an R&D leader in renewable energy technology," says Richard Corkish, head of the School of Photovoltaic and Renewable Energy Engineering at the University of New South Wales.

*This item has been corrected. Projected tax revenues are $24.5 billion, not $24.5 million.