Factbox: Carbon tax around the world

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

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

Prime Minister Kevin Rudd has brought forward the transition to an emissions trading scheme (ETS) to July 2014, in order to neutralise the issue of the carbon tax.

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


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.

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


A fixed-price carbon tax went into effect in July 2012 and applied to Australia's worst industrial polluters. It was to remain in place until 2015, at which point the cost of producing a ton of carbon would be determined by free market forces.

Prime Minister Rudd has advanced the original timeline by a year. The emissions trading scheme will now begin on July 1 2014.


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.


CHINA (state-based action)

The Chinese Government has implemented seven pilot carbon-trading programs, scheduled to start this year. These schemes will cover around 250 million people. The pilot carbon-trading programs are set to regulate 800 million to 1 billion tons of emissions by 2015 in the world's biggest cap-and-trade program after Europe's. The Chinese government is planning a carbon tax on big energy consumers by 2015.

UNITED STATES (state-based action)

There is no nation-wide carbon tax levelled in the USA. President Barack Obama supports plans to price carbon dioxide emissions from tailpipes, power plans and factories that have been blamed for worsening climate change. Government Administrations have not been able to secure support for legislation to set either a price or a limit on greenhouse gas emissions, although a few states have introduced the tax. Emissions trading has operated in the power sector in nine US states since 2009.

CANADA (province-based action)

Canada does not have a federal carbon tax, although some Canadian provinces have introduced carbon taxes. In 2007, Alberta became the first state or province in North America to put a price on carbon. In the same year, Quebec introduced a carbon tax to be imposed on energy producers. In 2008, British Columbia announced a carbon tax, to increase each year until 2012.

INDIA (tax on coal)

India's carbon tax is specific to coal only. 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. Revenue raised is designated to research and innovation in clean energy technologies and environmental remedial programmes undertaken by the National Clean Energy Fund.


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.


In April 2012, Japan legislated for a carbon tax of approximately 289 yen per tonne (approx. $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 introduced the world's first carbon tax in 1990, initially with exemptions for specific sectors or fuels. 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 euros per tonne of CO2.


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 producers to create packaging that is recyclable and was implemented in order to assist meeting the goal of recycling 65% of used packaging by 2012.


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.


In 1991, Norway introduced a tax on carbon. The tax started at a high rate of US$51 per metric ton of CO2 on gasoline, diesel, mineral oil, oil and gas used in North Sea extraction activities. It is among the highest carbon taxes in the OECD.


Denmark issued its carbon tax in 1992, including a tax refund for energy efficient changes. 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.


In 2008, a carbon incentive tax was introduced in Switzerland. It includes all fossil fuels, unless 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 12 Swiss Francs per metric tonne CO2.


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's first carbon tax was introduced in 2010, applying to kerosene, marked gas oil, liquid petroleum gas, fuel oil, and natural gas. It was estimated to add around 2-3 euros a week per household, or about 156 euros per year.


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 is injected into a national forest fund which pays indigenous communities for protecting the forests around them.


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


South Africa introduced a carbon tax on new vehicle sales in September 2010. Plans to introduce a carbon tax in 2013 have been delayed until 2015 after objections from metals companies.


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.

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