The nation’s largest polluters will be better off once the carbon tax turns into an emissions trading scheme and is linked with the European scheme, new analysis shows.
The change, due to the decision this week to dump the floor price for carbon in 2015 and to allow access to a limited amount of cheap permits from developing countries, is worth millions of dollars in saved revenue to the larger industries.
Under the carbon price policy the polluters pay $23 for each tonne of carbon they emit. This price is fixed until 2015-16. Those with overseas competitors that face no carbon price are given free permits as compensation.
The heaviest polluters presently receive 94.5 per cent of their permits free, which means they pay only for 5.5 per cent of their pollution, at $23 a tonne. That 94.5 reduces by 1.3 percentage points a year, meaning that when the carbon tax moves to an emissions trading scheme on July 1, 2015, they will be receiving 90.6 per cent of their permits free.
For now, the carbon price will be set by the market and linked to the European scheme.
Australian polluters will be able to source a maximum of 12.5 per cent of their permits from developing countries which cost less than half those sold domestically and which are on the European market.
Under an analysis seen by the Herald, the effect of maximising the availability of these cheap permits means a big polluter will have an effective assistance rate of 97 per cent in 2015-16, compared with the 94.5 per cent they get now. By 2019-20, when the big polluters are entitled to 86.2 per cent of free permits, maximising use of the cheap permits will give them an assistance rate of 92 per cent.
The analyses are based on an assumption that the price for a permit on the Australia/European scheme is $20 and the cheaper permits are $10.
