October 16, 2021

Australia Becomes First Developed Nation to Repeal Carbon Tax

Australia has repealed pro-environment carbon laws that put a price on greenhouse gas emissions, the first time a developed nation has made such a U-turn. The WSJ’s Ramy Inocencio speaks with Canberra reporter Rob Taylor to gauge the reaction.

CANBERRA, Australia—After almost a decade of heated political debate, Australia has become the world’s first developed nation to repeal carbon laws that put a price on greenhouse-gas emissions.

In a vote that could highlight the difficulty in implementing additional measures to reduce carbon emissions ahead of global climate talks next year in Paris, Australia’s Senate on Thursday voted 39-32 to repeal a politically divisive carbon emissions price that contributed to the fall from power of three Australian leaders since it was first suggested in 2007.

Australia, the world’s 12th largest economy, is one of the world’s largest per capita greenhouse gas emitters due to its reliance on coal-burning power stations to power homes and industry. In 2011, daily emissions per head amounted to 49.3 kilograms (108 pounds), almost four times higher than the global average of 12.8 kilograms, and slightly ahead of the U.S. figure of 48.2 kilograms.

The former Labor government, while introducing a price on carbon, said the move would help slash emissions by 160 million metric tons by 2020. It offered voters billions of dollars in compensation through tax breaks and welfare payments for increased costs stemming from one of the most dramatic reforms ever attempted in the energy-reliant economy.

But after the global financial crisis took hold in 2008, followed by the end of a decadelong mining boom in 2012 that slowed growth and employment in the A$1.5 trillion (US$1.4 trillion) economy, Australian voters turned against climate laws—recognized by the International Energy Agency as model legislation for developed countries—blaming them for rising energy bills and living costs.

The World Bank in May produced a State and Trends of Carbon Pricing report counting carbon pricing programs in 40 nations and 20 regions worth a collective US$30 billion, while also singling out repeal plans in Australia as one of the biggest international threats to the rollout of similar programs elsewhere, given its example.

Prime Minister Tony Abbott, who made a pre-election “pledge in blood” to voters and business to prioritize growth above climate shift, delivered on his promise after independent senators with deciding votes in the upper house sided with his conservatives, following a power shift this month that ended years of domination by the pro-environment Greens party.

“Today the tax that you voted to get rid of is finally gone, a useless destructive tax which damaged jobs, which hurt families’ cost of living and which didn’t actually help the environment is finally gone,” a jubilant Mr. Abbott told voters in a news conference after the Senate’s decision.

He said the carbon price was acting as a A$9 billion a year handbrake on the economy, which was adjusting to the end of a record mining investment boom that helped shield Australia through much of the recent global economic downturn.

Without matching emissions policies in other industrialized countries, Mr. Abbott had said earlier the tax was an unfair shackle on local companies and individuals, unequaled except in Europe, where an emissions market has operated since 2005.

Labor and Green opponents of the government said the repeal would make the country an international “pariah” on efforts to combat climate change.

“This is a fundamental moment in Australia’s history. We are about to devastate the future of this country,” said Labor Senator Lisa Singh in an impassioned speech warning the government that climate warming would impact most on future generations.

 

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