Australia’s High Fixed Carbon Price the Elephant in the Room

Linking Australia’s future emissions trading system to the European Union’s scheme fails to address the fact that Australian businesses will still face the world’s highest carbon price until 2015, Business Council of Australia Chief Executive Jennifer Westacott said.
“Today’s announcement is an acknowledgement by the government and the Greens that the floor price in the emissions trading system starting in 2015 was flawed because it imposed an artificially high price and complexity that would add unnecessarily to business costs,” Ms Westacott said.
“Now that some problems with Australia’s carbon pricing policy have been acknowledged attention must turn to addressing the issue of the three-year fixed price, which at a starting price of $23 imposes the world’s highest carbon price on businesses.
“Removing the floor price and creating the opportunity to access international permits at a lower cost once emissions trading starts in 2015 improves the capacity for businesses to manage the impact of Australia’s carbon price but only after enduring three years of unnecessary cost.
“Fixing fundamental flaws in Australia’s future emissions trading system is important, but any comfort this provides to businesses will be tempered by the huge cost they will still face relative to their competitors and which they cannot offset or recover for the next three years.
“What remains essential is that the jobs and competitiveness package is in no way adversely impacted as a result of these changes.
“Today’s announcement ignores the elephant in the room, which is the fact that Australia’s emissions reduction scheme starts out with the world’s highest carbon price at a time when businesses are struggling to remain competitive in a tough global economy,” she said.