This submission considers the options proposed in the Price Floor for Australia’s Carbon Pricing Mechanism discussion paper .
Australia’s policy response to the risks associated with climate change should be workable, at lowest possible cost, fiscally responsible and not make Australian industries uncompetitive if competitor nations do not take equivalent actions.
The Business Council of Australia is of the view that:
- Restrictions should not have been placed on businesses’ use of international permits to meet their full liabilities under the Clean Energy Act, including numbers of international permits and types of permits (subject to them complying with international standards).
- The Clean Energy Act should not include a floor price or a surrender charge. Both these elements will distort the market that is intended by the legislation and will bring additional costs to the economy and consumers at a time when all efforts should be directed at maintaining a strong and growing economy.
- The scheme should start with a low price in the fixed price period reflecting international prices while businesses and households adjust to this long-term policy. Should the floor price be maintained in the legislation, it too should be set to reflect the quantum of the international price.
The discussion paper outlines four different ways to implement the surrender charge.
In assessing the options, the BCA has given consideration to:
- the degree to which the option supports lowest cost for the liable businesses under the legislation
- the degree to which the option minimises market distortions
- the level of additional regulatory burden placed on business for the three-year operation of the floor price.
The BCA submission calls for further consultation on two of the options before a final decision is made.