$100 billion investment for renewables
Australia’s renewable energy sector is set for an unprecedented period of growth with $13 billion of public investment likely to be matched with another $100 billion in private investment funds in the years to 2050.
Under Australia’s carbon tax regime announced on Sunday some of the funds from the $23 a tonne carbon tax will go to a $10 billion Clean Energy Finance Corporation which will fund the research, development and commercialisation of renewable energy at an early state. Half of that will go to pure renewable energy, with the other half for hybrid technologies which also use fossil fuels.
Another $3 billion already committed by the Government will go also towards renewables through the creation of another new statutory body, the Australian Renewable Energy Agency. Former Rserve Bank chief Bernie Fraser will head a new Climate Change Authority.
Treasury modelling shows that the carbon tax to be imposed on the country’s top 500 polluters would facilitate a transition towards renewable energy that would see the sector provide 40 percent of the nation’s energy by 2050, up from 10 percent currently and higher than the 20 percent by 2020 target which remains in place.
The tax will rise by 2.5 percent each year until 2015 before transitioning to a floating price combined with the introduction of an emissions trading scheme.
“The carbon price is fundamental to transforming the Australian economy, in order to allow us to grow industries and jobs with less pollution,” the Government said.
“The countries that develop the technologies and products that allow the world to decouple production from pollution will prosper in the 21st century.”
Australian electricity prices are expected to rise by 8-10 percent as a result of the tax, but the Government has also introduced a raft of income tax measures and industry exemptions to soften the blow not just in terms of the power price, but increased production through the supply change of many goods.
$9.2 billion is on offer in the form of free permits to the steel industry, for example, to offset competition from countries which do not currently offer a carbon scheme. Steel works, aluminium smelters and pulp manufacturers would be eligible for 95 percent of free carbon permits, with plastics and chemical manufacturers receiving 60 percent and the natural gas sector 50 percent. The coal industry would receive $1.3 billion in compensation.
Taken as a whole, the top 500 polluting companies will receive carbon credits covering up to 94.5 percent of their emissions initially, on top of additional subsidies in the early years of the tax.
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