|Peabody Energy, with major coal holdings in Australia including the Wilpinjong mine shown here, labeled the government’s repeal of Australia’s carbon tax as a lesson in leadership for the modern world. (Photo courtesy of Peabody Energy)|
The Australian Senate voted on July 17 to repeal the country’s carbon tax, delivering on a promise made by Prime Minister Tony Abbott when he was elected in September 2013. Regarding the vote, Abbott said, “A useless, destructive tax, which damaged jobs, which hurt families’ cost of living, and which didn’t actually help the environment is finally gone. With the carbon tax gone goes also a 9% impost on the price of power, a $9 billion a year handbrake on our economy, and a $550 a year hit on households’ budgets.”
The carbon tax repeal was greeted with approval by Australian industry groups, including those representing the mining industry, and was condemned by the opposition Labor and Greens parties and the environmental left.
Brendan Pearson, chief executive of the Minerals Council of Australia, said, “The removal of the world’s biggest carbon tax is an important step toward regaining the competitive edge that Australia lost over the last decade. Its repeal will improve prospects for jobs and investment growth in export- and import-competing industries and relieve a significant burden on households.
“In two years, in direct tax burden alone, it raised $15 billion in new tax, or an annual tax burden of $326 on every single Australian. This compares with an annual tax burden of $4.30 per person for the European carbon pricing scheme and $8.30 per person for the Californian scheme.
“The repeal of the carbon tax does not contradict a global trend. According to the World Bank and the International Energy Agency, just 8% of global emissions are covered by carbon pricing schemes.
“In extensive economic modeling exercises, the Commonwealth Treasury correctly predicted that the carbon pricing scheme would increase electricity costs, reduce GDP, reduce productivity growth, slow wage growth, and sharply reduce investment in key energy intensive sectors.
“The carbon tax did not constitute economic reform and was never calibrated with the efforts of other nations. It goes unlamented,” Pearson said.
Other Australian mining industry groups applauding the carbon tax repeal included the Australian Mines and Metals Association, the Association of Mining and Exploration Companies, the Chamber of Minerals and Energy of Western Australia, the Queensland Resources Council, and the New South Wales Minerals Council.
Elsewhere, Peabody Energy, headquartered in the United States and the world’s largest private-sector coal company, with substantial mining operations in Australia, issued a statement praising the repeal. “The Australia government’s reversal of the carbon tax is a lesson in leadership for the modern world,” Peabody Energy Chairman and CEO Gregory H. Boyce said. “We encourage U.S. policymakers to take the same path and reject the administration’s costly proposed rules on power plants. Technology, not caps and taxes, is the key to long-term improvement in carbon emissions.”
Peabody has mining operations across Queensland and New South Wales. In 2013, these mines achieved total sales of 34.9 million metric ton (mt), primarily to steel producers in Japan, Europe, Taiwan, Korea, India, and South America, and electricity generators in Australia and Asia.
On the other side of the issue, Michael Raupach, director of the Climate Change Institute at the Australian National University, said repealing the tax was “a tragedy, not a triumph,” and former U.S. Vice President Al Gore called the repeal “disappointing.”
European Commissioner for Climate Action Connie Hedegaard said, “The European Union (EU) regrets the repeal of Australia’s carbon pricing mechanism just as new carbon pricing initiatives are emerging all around the world. The EU is convinced that pricing carbon is not only the most cost-effective way to reduce emissions, but also the tool to make the economic paradigm shift the world needs.”