Australia fossil fuels should face new climate levy, experts say

14th February 2024 By: Bloomberg

Australia fossil fuels should face new climate levy, experts say

Producers and consumers of fossil fuels in Australia, one of the world’s coal and gas powerhouses, should pay a new climate levy under efforts to accelerate a transition to a greener economy, according to two former government advisers.

The charge would impact more than 100 businesses and be levied on each ton of pollution at a rate equivalent to the European carbon price, Rod Sims and Ross Garnaut of the pro-climate action think tank The Superpower Institute said Wednesday.

Their plan is aimed at generating an initial A$100-billion a year to help fund deployments of renewable energy, improve power grids and underwrite new infrastructure to support the development of green export industries.

A current focus on managing domestic emissions is too narrow, according to Sims, a former head of the Australian Competition and Consumer Commission.

“That gets rid of a little over 1% of world emissions,” he said in an interview. “On the other hand, if we make green iron and green aluminum, urea, silicon, aviation fuel, we can reduce world emissions by anywhere between 6% and 9%.”

The proposal is likely to stir fresh debate over climate policy in Australia, which in 2014 scrapped a short-lived carbon levy after fierce opposition from some sectors.

Prime Minister Anthony Albanese’s government legislated Australia’s first emissions targets — aiming to cut 43% from 2005 levels by 2030 — though has faced some criticism for not pushing for more aggressive curbs. At the same time, Albanese has seen opposition from groups in regional Australia, including farmers, who argue new power lines required to support clean energy are taking up agricultural land.

Sims will join with Garnaut, a former government adviser on climate change, to deliver a speech Wednesday to the National Press Club in Canberra calling for new incentives to boost early-stage investment in clean technologies, and to set out their plan for a carbon solutions levy.

“Some of these policies will seem controversial to some and may be rejected immediately, but today is the beginning of the debate, not the end,” Sims plans to say, according to a text of his speech.