PERTH (miningweekly.com) − The refusal of three major economies to extend the Kyoto Protocol undermined the carbon tax argument, and meant that Australia would introduce a new A$11-billion tax in the absence of a binding global emissions pact, a mining industry group has warned this week.
Japan, Russia and Canada told the Group of Eight (G8) meeting over the weekend that they would not support an extension of the Kyoto Protocol, which Minerals Council of Australia CEO Mitchell Hooke said all but eliminated the prospects for an early and comprehensive global agreement to reduce carbon emissions.
At the G8 meeting, the US also reiterated its long-standing position that it would not join a Kyoto-style binding agreement.
Hooke said in a statement that the move left the EU and Australia as the only major developed nations committed to an extension of the Kyoto Protocol after the first commitment period expires at the end of 2012.
That meant Australia would face binding rules under a “flawed agreement” covering only 15% of global emissions, the Minerals Council warned.
“Going it alone on a carbon tax will simply serve to undermine the economy sacrificing jobs, our international competitiveness and standard of living,” Hooke said.
He noted that modelling prepared for state and territory governments showed that a carbon pricing scheme similar to the policy under consideration would reduce forecast employment by 126 000 by 2020.
“In the absence of a binding international agreement on greenhouse gas emission reductions, there should be a full allocation of permits to trade exposed firms. Given the slow progress in global negotiations and to provide clarity and certainty for investors, the initial allocation should be fixed for five years, with an independent review conducted thereafter to assess progress made by other nations towards binding emission reduction commitments,” Hooke added.
Meanwhile, a Commonwealth funded report released by economist Ross Garnaut noted that a carbon price of A$26/t of carbon could raise around A$11,5-billion during the first year.
Garnaut said that the amount of carbon revenue would increase with the carbon price, but with fall as emissions decreased.
“The revenue from a carbon price is expected to rise for a decade or so. In the longer term, the revenue from a carbon price will stabilise and then start to decline as a result of steady falls in emissions, eventually overcoming the rise in permit prices.”
In his updated review of the report ‘Australia in the Global Response to Climate Change’, Garnaut said that a carbon price had some short-term negative effects on productivity growth and income, although less than direct action would secure similar reductions in emissions.
The report further suggests that three independent bodies should be established to implement and administer carbon tax price arrangements, as well as advise on future targets.
Prime Minister Julia Gillard was proposing to introduce the emissions tax by mid-2012, with an emissions trading scheme to be introduced within the following five years.
The proposed tax has faced serious opposition from the mining sector, with industry participants saying that the tax could have a negative impact on exports and could impact on employment.