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Australia Scraps Carbon Price as Abbott Meets Election Pledge

Image: Australia Scraps Carbon Price as Abbott Meets Election Pledge Australian Prime Minister Tony Abbott

Wednesday, 16 Jul 2014 10:45 PM

Australia’s Senate voted to scrap the nation’s price on carbon, fulfilling Prime Minister Tony Abbott’s election campaign pledge to abolish a “toxic tax” he said threatened the nation’s economy.

The repeal bill was passed 39 votes to 32 in the 76-member upper house today, dismantling a mechanism introduced by the previous Labor government that initially charged polluters A$23 ($21.5) per ton of greenhouse gases emitted.

Repealing the carbon price may put Australia, which is hosting the Group of 20 nations summit in November, at loggerheads with President Barack Obama, who is seeking to form a worldwide agreement to combat climate change. Australia, the world’s biggest emitter of fossil fuels per capita, hasn’t backed U.S. calls to add the issue to the G-20 agenda when leaders meet in Brisbane.

“Abbott campaigned so hard for so long to get rid of the carbon tax, which has been pretty unpopular with voters, that the repeal will be seen as a big victory domestically,” said Zareh Ghazarian, a Melbourne-based professor at the Monash University School of Political and Social Inquiry. “In international diplomatic circles, it’s a different matter. It may cause discomfort to the government during Obama’s visit later this year.”

Today’s vote to repeal the carbon price comes a week after the government’s second bid to abolish the mechanism was blocked in the upper house. Clive Palmer, the mining magnate whose party Abbott has to deal with in the upper house to pass legislation, on July 10 said his three Senators wouldn’t support it without amendments that force energy company’s to pass on savings to consumers.

While repealing the carbon-price mechanism is a victory for Abbott’s Liberal-National coalition, his government may still struggle with other climate change measures in the Senate.

Palmer has said his Palmer United Party will vote against Abbott’s Direct Action Plan, which includes a A$2.55 billion Emissions Reduction Fund to encourage companies to cut greenhouse gases through taxpayer-funded grants.

Palmer has also said his three PUP senators will block plans to abolish the Clean Energy Finance Corp., which helps fund renewable energy projects, and the Climate Change Authority, which provides advice on the carbon price and emissions reduction targets.

The government may also be prevented from abolishing the Australian Renewable Energy Agency by Australian Motoring Enthusiast Party Senator Ricky Muir. If PUP senators and Muir vote together in a bloc, they effectively hold the balance of power in the upper house.

The carbon price came into force in July 2012. It was fixed at A$23 per ton of greenhouse gases emitted in its first year, rising every year until it was due to shift to a market-set mechanism from July 2015.

Labor and the Greens party, who held the balance of power in the upper house before new senators were sworn in this month, rejected the government’s first attempt to scrap the carbon price in March.

Abbott has said abolishing the levy will save the typical household about A$550 a year through lower electricity prices. Australia, the world’s 12th-largest economy, will still be able to meet its promised 5 percent reduction in emissions by 2020, the government says.

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