Factbox: Carbon taxes around the world

15 May 2012, 4:00 pm   -   Source: SBS Staff
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Carbon taxes have been introduced by several countries since 1990 (AFP/Getty Images).

Carbon taxes have been introduced by several countries since 1990 (AFP/Getty Images).

How will a carbon tax work in Australia, and which countries have already introduced a carbon pricing scheme? Check our quick guide.

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As the federal government prepares to introduce a carbon pricing scheme on July 1, SBS looks at how a carbon tax will work and which countries have already introduced them.

WHY IS THE GOVERNMENT INTRODUCING A CARBON TAX? 

The federal government says it wants to put a price tag on pollution. At the moment business and industry can pollute for free. The government says this is the most efficient way to discourage polluters to emit greenhouse gases, which are contributing to climate change.

HOW DOES CARBON PRICING WORK IN AUSTRALIA?

Carbon pricing, introduced in Australia by the clean energy legislation, applies to Australia's largest 500 emitters, which are companies that emit more than 25,000 tonnes of carbon dioxide or supply or use natural gas.

Carbon pricing begins on July 1, 2012. In the first three years, the carbon price will be fixed. From July 1 2015, the price will be set by the market.

In the 2012-2013 financial year, the carbon price will be $A23 per tonne. It will rise to $A24.15 per tonne in the following financial year and then to $A25.40 per tonne in 2014-15.

From July 2015, the number of units issued by the government each year will be capped by a pollution cap set by regulators. Most carbon units will be auctioned by the Clean Energy Regulator and the price will be set by the market, starting from a floor price of $A15 per tonne.

Under the Carbon Farming Initiative (CFI), farmers and land managers can earn carbon credits by storing carbon or reducing greenhouse gas emissions on the land. These credits can be sold to people and businesses wishing to offset their emissions.

This scheme includes credits earned from activities such as reforestation, savannah fire management and reductions in emissions from livestock and fertiliser use.

CFI credits can also be sold to international companies.

HOW IS A CARBON TAX DIFFERENT FROM AN EMISSIONS TRADING SYSTEM? 

In an emissions trading system, a central authority sets a cap on how much a pollutant such as CO2 may be emitted. The cap is allocated to companies in the form of emissions permits, which give them the right to emit a certain amount of the pollutant. Firms are required to hold a number of permits equivalent to their emissions.

The total number of permits issued to all companies cannot exceed the emissions cap, and firms that need to increase their emission permits must buy them from companies that require fewer permits. This means permit buyers are paying a charge for polluting more, while sellers are being rewarded for reducing emissions.

CARBON TAXES AROUND THE WORLD

CHINA (state-based action)

China is planning a carbon tax on big energy consumers by 2015, and it's likely the cost of each tonne of CO2 will be $US1.55. Some states have already introduced a carbon tax.

UNITED STATES (state-based action)

There is no nationwide carbon tax levelled in the USA, although a few states have introduced the tax. Colorado passed a carbon tax in November 2006. California has a carbon tax of 4.4 cents per tonne of CO2. In Maryland, a tonne of CO2 is worth $5 from a source emitting more than a million tonnes of carbon dioxide during that year.  

CANADA (state-based action)

Canada does not have a federal carbon tax, but some Canadian provinces and states do have carbon taxes. The province of Quebec and the state of Alberta introduced a carbon tax in 2007. British Columbia introduced a tax of $10 per tonne of CO2 in July 2010.

INDIA (tax on coal)

In July 2010, India introduced a nationwide carbon tax of 50 rupees per tonne ($1.07) of coal both produced and imported to India.

SOUTH KOREA introduced a national carbon tax in 2008.

JAPAN currently does not have a carbon tax but it's planning to implement one. 

EUROPE (national-based action)

A carbon tax was proposed by the European Commission in 2010, but a carbon tax has not been agreed upon by the 27 member states. The current proposal by the European Commission would charge firms between 4 and 30 euros per metric tonne of CO2. 

The European Union enacted an emissions trading scheme in 2005 which places a cap on the amount of carbon dioxide and nitrous oxide that can be emitted by big polluters. It operates in the 27 EU member states as well as Iceland, Liechtenstein and Norway. Their current target is a 21 per cent cut of 2005 emissions by 2025 (Australia’s is a 5% cut of 2000 emissions by 2020).

Several European countries have enacted a carbon tax. They include: Denmark, Finland, Ireland, the Netherlands, Norway, Slovenia, Sweden, Switzerland, and the UK.

FINLAND

Finland introduced the world’s first carbon tax in 1990, initially with exemptions for specific sectors. Manly changes were later introduced, such as a border tax on imported electricity.  Natural gas has a reduced tax rate, while peat was exempted between 2005 and 2010. In 2010, Finland’s price on carbon was €20 per tonne of CO2.

THE NETHERLANDS

The Netherlands introduced a carbon tax in 1990, which was then replaced by a tax on fuels. In 2007, it introduced a carbon-based tax on packaging, to encourage recycling.

SWEDEN

In 1991, Sweden enacted a tax on the use of coal, oil, natural gas, petrol and aviation fuel used in domestic travel. The tax was 0.25 SEK/kg ($US100 per tonne of C02) and was later raised to $US150. With Sweden raising prices on fossil fuels since enacting the carbon tax, it cut its carbon pollution by 9 per cent between 1990 and 2006.

NORWAY

In 1991, Norway introduced a tax on carbon. However its carbon emissions increased by 43 per cent per capita between 1991 and 2008.

DENMARK

Since 2002, Denmark has had a carbon tax of 100 DKK per metric ton of CO2, equivalent to approximately 13 Euros or 18 US dollars. Denmark’s carbon tax applies to all energy users, but industrial companies are taxed differently depending on the process the energy is used for, and whether or not the company has entered into a voluntary agreement to apply energy efficiency measures.

SWITZERLAND

A carbon incentive tax was introduced in Switzerland in 2008. It includes all fossil fuels, unless they are used for energy. Swiss companies can be exempt from the tax if they participate in the country’s emissions trading system. The tax amounts to CHF 36 per metric tonne CO2.

UK

In 1993, the UK government introduced a tax on retail petroleum products, to reduce emissions in the transport sector. The UK's Climate Change Levy was introduced in 2001.

IRELAND

A tax on oil and gas came into effect in 2010. It was estimated to add around €43 to filling a 1000 litre oil tank and €41 to the average annual gas bill.

COSTA RICA

In 1997, Costa Rica enacted a tax on carbon pollution, set at 3.5 per cent of the market value of fossil fuels. The revenue raised from this goes into a national forest fund which pays indigenous communities for protecting the forests around them.

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Climate Alarmist Fraud

GB - from Clifton Springs, 9 days ago

Anybody believing the alarmist hype should read the climategate leaked emails - I read one where the head of the CRU told a researcher to put a value of .015 in a graph at a particular point - he would see why when he examined the finished graph! That isn't science - it is fraud, and extremely rewarding fraud at that. The climate alarmist "scientists" are getting taxpayer-funded grants worldwide of 10 billion dollars a year!

What's all the Fuss About

Climate Guy - from Yamba, 9 days ago

What most people fail to understand is that "man made climate change" has been happening since the industrial revolution 200 years ago when we first started burning fossil fuels - and no one even noticed it ! That is until Al Gore (chicken little) started a world wide pannick. Maybe climate change in the future will be as unspectacular as it has been in the past. Even if we had the capacity to reduce global emissions (which I seriously doubt) - would it really be worth it?

Brilliant Con!

True Blue Ozzie - from Gladstone Q, 9 days ago

A new tax dressed up as the savour of the enviroment! It's more about the money for Labor than the enviroment, there over spending and budget blow outs have left them in a mess. Instead of increasing the GST, which would cause out rage with the voters, it was far simpler in there minds to bring in the carbon tax, posed as saving the enviroment. Knowing full well that most people would be scared and concerned about there enviroment for future generations. Oh and its way over priced!

Money grab

Mitch - from Qld, 9 days ago

Its all a money grab. Taking money from the big business. Why don't they invest all this tax into renewable energy resources to actually change the way we live. Instead of making the cost of living higher so they can fund their own pay rises and money handouts to win votes. It's time for change. If only the opposition was worthy

Will it really make a difference?

Matt - from North Coast NSW, 10 days ago

Most of the techniques promoted to reduce CO2 are just gimicks - (eg carbon storage), or have no real long term impact on carbon stored in the landscape - eg savannah fire management, and carbon farming. The craziest idea is the proposed "reductions in emissions from livestock". This shows a basic lack of understanding of the carbon cycle. If livestock are removed from the landscape, then the grasses they would have eaten will be broken down by microorganisms that also produce greenhouse gases

why not tax coal

question evrything - from Perth, 10 days ago

Why then does the government get so excited about the sale of coal to China? Shouldnt they be taxing coal at the mine source? Europe is taxing planes that land there so why not tax coal? The government is taxing iron at the source isnt it?

Why?

Bob - from Melbourne, 10 days ago

There is so much information we have and don't have about this issue. If we breakdown the issue in it's simplest form, we have information presented to us, the people, that we are told is accurate or told to believe. The whole issue is about telling a story we are either forced or told to believe. How do we as the public know if the information has been fudged or not, there are too many discrepancies on both sides of the issue. We can't do much about it now as most governments have adopted a similar tax. Either way, if the government wants to tax us, like the flood levy, they will, and there's nothing you can do about it. We are all lambs in the ever chugging system of life. However in saying all this, if those lazy fat cats in Canberra could plan ahead properly, we would not be in this mess, sounds like their jobs have become a comfort zone.

Get a dose of realism people

Q man - from Karratha , 11 days ago

It is true that the earths temp is rising, but us having the highest pollution tax in the world isn't going to solve it. Instead of the gov supporting industries like the car manufacturing and filling the pockets of Holden owner GM, it could go toward R&D of thermal energy or something. As for solar panels they're not the answer. How much energy do you think went into smelting all the alloy for the struts and braces that hold it on your roof, not to mention the copper, plastics, glass etc. All made in a country that has little regulation on how clean those processes are and to gain such a little amount energy the end product. In the end some business will become unsustainable and move overseas as it already has for many years because it is cheaper to do so. The question is what is our greatest assets? The answer is us! Not the stuff that comes out of the ground. We should be creating the worlds best minds not the worlds biggest mines!

We're a late comer

Drew - from Melbourne, 11 days ago

Most countries have started on the carbon tax (at least partially in states/provinces) long before we did. So, they've been paying to curb their own pollution, while we've been freely polluting. I think the $23 a tonne carbon tax is appropriate for one reason: to catch up with the others who already had the head start. Just because we're 1.2% it doesn't mean we can pollute freely. If I live in a street with a hundred other people, do I expect others to clean up after me?

We only produce 1.2% of the toal emissions of CO2

Alan G. Hider - from Elanora, 11 days ago

Google Carbon Dioxide production by country and you'll find that Astralia is so far down the list that anything we do will have a totally negligible effect on the world total. France has nuclear energy and still produces more than we do, plus some central Asian countries. All this waste of energy and hot air by the Labor Party is simply making Australia uncompetitive in the world.

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