On 24 February 2011, the Australian Government announced
a two-stage plan for a new carbon price scheme to address climate
change. The first part of the plan is a carbon tax before
transitioning to a cap and trade emissions trading scheme. The
Federal Government's aim is to reduce Australia's carbon
emissions by 60% of 2000 levels by 2050.
Under the current proposal, Australia could have a fixed price
on carbon as early as 1 July 2012 (subject to parliamentary
approval this year). The fixed price term would last three to five
years, with the price of carbon increasing to a predetermined rate
in each year.
At the end of the fixed price period, the scheme could convert
to a flexible price cap and emissions trading scheme.
However, an option could exist to defer the commencement of the
flexible price. Any decision to continue with the fixed price
arrangements is likely to be taken 12 months before the end of the
fixed price phase. In making this decision, the following
issues will be relevant:
the state of the international carbon market
developments in carbon pricing in key competitor economies
Australia's internationally agreed targets and progress
towards meeting them
the fiscal implications of any on-budget purchases of
internationally accepted emissions units that may be required for
Australia to comply with any internationally agreed emissions
potential impacts on the Australian economy
creating investment certainty in clean technologies, energy
efficiency and carbon markets.
It is proposed that the new scheme will cover all six greenhouse
gases recognised under the Kyoto Protocol, namely, carbon dioxide,
sulfur hexafluoride, methane, nitrous oxide, hydrofluorocarbons and
perfluorocarbons. The scheme will have broad coverage and
extend to the following emissions sources:
the stationary energy sector
industrial processes sector
fugitive emissions (other than from decommissioned coal
During the fixed price phase, international emissions units
cannot be used. When a cap and trade emission trading scheme
is in place, it is anticipated that international emissions units
may be used for scheme compliance (subject to meeting specified
Issues still to be decided
There are still many issues to be resolved. They
annual rates of increase in the fixed price period
assistance to emission intensive trade exposed businesses,
electricity generators and households
compensation for inclusion of fuel
support for low emissions technologies and innovation
appropriate criteria for the use of international emissions
How can DLA Phillips Fox help you?
We can assist you by providing initial advice on the possible
implications of the new carbon scheme for your business and show
you how minimise potential cost and risk to your business.
DLA Phillips Fox is one of the largest legal firms in
Australasia and a member of DLA Piper Group, an alliance of
independent legal practices. It is a separate and distinct legal
entity. For more information visit
This publication is intended as a first point of reference and
should not be relied on as a substitute for professional advice.
Specialist legal advice should always be sought in relation to any
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