Australian PM replaces carbon tax with new emissions trading scheme

Australia’s newly elected Prime Minister Kevin Rudd said the carbon tax which was put in place by former Prime Minister Julia Gillard, will be replaced by a less-severe emissions trading scheme a year ahead of schedule.
The fixed-price carbon tax on Australia’s worst industrial polluters went into effect in July 2012 and was supposed to remain in place until 2015 when it was set to be replaced by an emissions trading scheme. Rudd is advancing that timeline by a year. The emissions trading scheme, which will now commence on July 1, 2014, will reduce the cost of carbon from a predicted AU$25.40 (US$23.42) per metric ton (mt) in July next year to an estimated AU$6 (US$5.53) per mt. Under the new scheme, the cost of emitting a ton of carbon will be determined by buyers and sellers.
“This is the fiscally responsible thing to do,” Rudd said. “The nation’s 370 biggest polluters will continue to pay for their carbon pollution, but the cost will be reduced, meaning less pressure on consumers.”
The move is expected to save Australian households an average of AU$380 (US$350) a year, Rudd said. The savings would largely be in the form of lower energy bills.
The government will make up for a predicted AU$3.8 billion (US$3.5 billion) shortfall in the federal budget with spending cuts, including scaling back funding for some environmental programs.
Australia is one of the world’s worst greenhouse gas emitters per capita because of its heavy reliance on massive coal reserves to generate electricity.