CANBERRA, (Reuters) – Australia unveiled its most sweeping economic reform in decades on Sunday with a plan to tax carbon emissions from the nation’s worst polluters, reviving hopes of stronger global climate action with the largest emissions trade scheme outside Europe.
Prime Minister Julia Gillard said 500 companies including steel and aluminium manufacturers would pay a A$23 ($24.70) per tonne carbon tax from next year, rising by 2.5 percent a year, moving to a market-based trading scheme in 2015.
“It’s time to get on with this, we are going to get this done,” said Gillard after a bruising battle to win political support for the scheme, which has polarised voters and business. A parliamentary vote on the scheme is expected before year-end.
Australia is the developed world’s worst per-capita greenhouse gas emitter because of its heavy reliance on cheap coal for power generation. Emissions are set to rise in the booming economy without a carbon cost, the government says.
The stakes are high for Gillard’s Labor party, which relies on the support of Greens and independents for a one-seat lower house majority. Her popularity has slumped to record lows over the scheme.
With the details now finally released after months of waiting, Gillard will now try to convince voters opposed to the plan ahead of a parliamentary vote, trying to deflect a campaign against it by the hardest hit businesses.
“It is absolutely critical that the government sells this very effectively,” said Tony Wood, director of the energy programme at the Grattan Institute, a policy think tank.