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Australia to set carbon price of A$23 per tonne -media

Archived News, Posted on 07 Jul 2011

Reuters

CANBERRA (Reuters) - Australia's government will set a carbon price of A$23 ($24.60) a tonne when it unveils a carbon tax and emissions trading scheme at the weekend, while also slashing the number of businesses forced to pay to pollute, newspaper reports said on Thursday.

Prime Minister Julia Gillard's minority Labor would announce on Sunday a price lower than one demanded by Greens supporters, and cut the number of companies hit by its carbon tax from 1,000 to about 500, The West Australian and Fairfax newspapers said, without naming sources.

Senior government ministers in Canberra asked about the reports declined to comment.

Gillard's fragile government plans to impose a tax on carbon emissions from mid-2012 before transitioning to a carbon-trading system three to five years later, under which the nation's 1,000 biggest polluters will need to buy carbon permits on an open market.

If passed by parliament later this year, as expected, Australia will be on track to have the biggest national emissions trading scheme outside Europe.

But uncertainty over the policy, which would tax emissions from next year, has also begun to frustrate investment decisions, particularly in the coal-fired power industry and in renewable energy and plantation forestry.

The cost of the plan, which was to be broadly revenue neutral, had blown out to about A$4 billion over four years from its start on July 1 next year, with most of the costs from implementation, The Age newspaper said.

A decision to exclude fuel costs to minimize the political damage and sooth voters who mostly oppose the tax had reduced the number of companies liable to pay, the paper said.

Companies to be excluded included fuel suppliers and distributors, as well as companies emitting synthetic greenhouse gases, such as the refrigeration and air conditioning industries.

Overall, only 0.02 percent of businesses will be directly liable to pay the carbon tax, The Age said.

Previous Treasury Department modeling has suggested that a A$23 a tonne price, with petrol omitted as promised by Gillard, would push up overall costs through the economy by one percent.

Electricity prices would rise between 10 and 15 percent, with the cost of food increasing about one percent.

(Reporting by Rob Taylor; Editing by Ed Davies)

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