Factbox: Carbon taxes around the world

21 Aug 2012, 12:00 am   -   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 does the carbon tax work in Australia, and which countries have already introduced a carbon pricing scheme? Check our quick guide.

RELATED

The Climate Commission says by 2013, 33 countries and 18 sub-national jurisdictions will have a carbon price in place.

Its report - The Critical Decade: International Action on Climate Change - says these schemes could be expected to cover around 850 million people, around 30 per cent of the global economy and around 20 per cent of global emissions.

Click here to view the report.

The federal government's carbon pricing scheme came into force on the 1st of July 2012.

SBS looks at how the carbon tax works and which countries have measures in place.

WHY HAS THE GOVERNMENT INTRODUCED A CARBON TAX?

The federal government says a price tag on pollution is the most efficient way to discourage business and industry from emitting 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 began 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 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.

Australia has a legislated renewable energy target designed to ensure that 20 per cent of electricity comes from renewable sources by 2020.

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)

The Chinese Government plans to develop emissions trading schemes in seven key cities and provinces from 2013. These schemes will cover around 250 million people. The Chinese Government aims to
work towards a nation-wide approach after 2015.

UNITED STATES (state-based action)

There is no nationwide carbon tax levelled in the USA, although a few states have introduced the tax. The United States Administration has not been able to secure support for legislation to set either a price or a limit on greenhouse gas emissions. However, emissions trading has operated in the power sector in nine states since 2009. California’s emissions trading scheme will start in January 2013.

CANADA (province-based action)

Canada does not have a federal carbon tax, but two Canadian provinces have existing carbon taxes (Quebec and British Columbia). Alberta implemented emissions trading in 2006 and Quebec’s scheme will start in 2013. A further two provinces, British Columbia and Ontario, are considering emissions trading schemes.The Canadian Federal Government has no immediate plans to implement national emissions trading.

INDIA (tax on coal)

In July 2010, India introduced a nationwide carbon tax of 50 rupees per tonne (less than $A1) of coal both produced and imported to India.

SOUTH KOREA

The Republic of Korea passed legislation in May 2012 for an emissions trading scheme to start from 1 January 2015. The emissions trading scheme will cover facilities producing more than 25,000 tonnes of greenhouse gas emissions – expected to be around 450 of the country’s largest emitters.

JAPAN

In April 2012, Japan legislated for a carbon tax of approximately ¥289 per tonne ($A3.30) by increasing existing taxes on fossil fuels (coal and LPG/LNG) with effect from 1 October 2012. Half the revenue will
fund low-emissions technologies. Japan has emissions trading schemes operating in the Tokyo and Saitama regions, covering 20 million people.

EUROPE (national-based action)

The European Union emissions trading scheme began in 2005 and now covers the 27 countries of the European Union, and three non-European Union members: 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).

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.

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. The United Kingdom participates in the European Union emissions trading scheme and is covered by European Union policies and measures. The United Kingdom has put in place regulations requiring all new homes to have zero emissions for heating, hot water, cooling and lighting from 2016.

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.

BRAZIL

The state of Rio de Janeiro is exploring options to implement a state-wide cap and trade system.

SOUTH AFRICA

South Africa introduced a carbon tax on new vehicle sales in September 2010. South Africa is planning to introduce a carbon tax from 2013, starting at R120 ($A15) per tonne for emissions above a threshold. Each company will have 60 per cent of its emissions tax exempt, with higher exemption thresholds for cement, iron, steel, aluminium, ceramics and fugitive emissions as well as trade exposed industries. Agriculture, forestry, land use and waste will not be taxed.

NEW ZEALAND

The New Zealand Government set up an emissions trading scheme in 2008. The scheme covered forestry initially, and was then expanded in 2010 to cover stationary energy, transport, liquid fossil fuels and industrial processes.

Carbon Tax , Carbon Emissions

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Enjoying second coldest spring in recorded history ...

Bob Dobbs - from New York, NY, 22 days ago

... this must be because of the carbon tax! Thanks, Australia! *chuckle* Seriously though, assuming you're a climate alarmist and buy in to anthropogenic climate change, I wonder if you realize how much CO2 reduction would be necessary to change according to your model? Unless we develop environmentally friendly, high capacity batteries, and get the ITER fusion reactor to work, most of the planet would need to return to an agrarian existence! Carbon taxes are a scam.

Can't agree with Carbon Tax at all

Ian - from Adelaide, 29 days ago

Carbon tax has got to be the biggest Conn. I cant believe you can think its just going to cost a small amount to do something beneficial . .for Whom? Please do your research . 1) Who ever is behind this tax is collecting the $$ 2) What is Australia's debt per capita?3) Please look up HAARP. Real countries are going down and we can just sit back and say "She'll be right mate" I'm sorry to say but its all too late. Bad Government with a hopeless treasurer looking down the same barrel as Greece.

Australia is not alone

Paul - from Bellevue Heights, Adelaide, 3 months ago

I think that complainants about the carbon tax should just get over the fact that they might have to pay a small amount to do something beneficial for all. They might also consider the lies they have been told by those simply seeking a political or financial advantage. For instance, Abbott's mantra, repeated last week on Lateline, that Australia will be disadvantaged because it is the first country with such a tax. If you still believe that, stretch your brain and scroll back up this page.

CO2 is a nutrient and has never ever caused climate change

Fred - from Geelong, 4 months ago

Global Warming is different to Climate Change yet intertwined. Just as Global Cooling (1960's - 70"s) is. It is cyclical and GW/GC is more aligned with Solar variations than anything as NASA has just confirmed. Anthropogenic warming has not been proven (as 30,000 Atmospheric Scientists, many with PhD's) and the IPCC is a political joke publishing their agendas according to the politicians whims - google it and it clearly shows the IPCC method of selecting data and who can submit articles.

Mr

Vern - from Kogarah, 4 months ago

Sweden reduced it's C02 emissions by almost 10% in 15yrs via carbon tax.Businesses do well,r very efficient.No-one leaving country because of high personal taxes or carbon tax.Former gives them much back including an excellent education sys-teachers must have MastersDegree with waiting list to get in,Health Sys & retirement benefits + more,Latter drives their many very successful businesses to be more efficient & less reliant on nonrenewables.Govt not held to ransom by oil,gas & coal industry.

Fact or Fiction

Phillip Lodge - from Frankston, 4 months ago

With the introduction of the carbon tax, the unit cost on my electricity bill increased from 21.4 cents to 23..89 cents. This equates to 11.63%. Around 9% of this is Carbon Tax. Additionally, the Supply Cost also increased by 11.62% from 77.7 cents per day to 86.73 cents . In November 2011, the unit cost was 18.52 cents while the Supply Charge was 64 cents per day. In otherwords, over 12 monts the unit cost of electricity increased by 29% and Supply Charge, ploes and wires, increased by 35.5%.

Pie shop

david - from ingham , 7 months ago

the other day i went down to micks pies for a pie and i bit into the pie and tasted something yuck turns out there was carbon in my pie f the carbon tax

The Carbon Tax Myth

The Carbon Tax Myth - from Sydney, 8 months ago

Great article! I found your comparisons between countries initiative to opt in or out of implementing a Carbon Tax particularly beneficial! www.TheCarbonTaxMyth.wordpress.com strive to do a similar thing. I think it's important to let Aussies know where we sit on a global scale in regards to taking action against climate change.

no

T - from melbourne, aus, 8 months ago

carbon tax no just no

Former Labor voter

Kev - from Newtown, 9 months ago

I just recieved my Winter electricity bill now double what it was last year ...not happy Gillard

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