Carbon Tax Unlikely To Derail Australia’s LNG Industry

After nearly four years in power, Australia’s ruling Labor Party has moved to legislate a carbon emissions tax starting on July 1, 2012. The legislation would pave the way for a transition to a flexible cap-and-trade emissions trading scheme in a nation that ranks as one of the largest carbon dioxide emitters in the world on a per capita basis. Under the proposed Gillard administration legislation, the tax paid by Australia’s 500 biggest polluters will start at an initial A$23 per ton and will rise by 2.5% per year in real terms until July 1, 2015. The price of carbon will then be set by a market-based emissions-trading mechanism. The nation’s extractive industries, which are the backbone of the economy, and power generators, which are highly dependent on coal, are generally opposed to the scheme, as is the opposition Liberal party, which is staunchly conservative. However, measures designed to reduce the impact of the tax on emissions intensive and trade-exposed industries – such as Australia’s burgeoning LNG industry – have encouraged some grudging acceptance. Download here