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Prominent Australian economists Ross Garnot and Rod Sims this week attempted to defuse the carbon policy debate in Australia. to suggest A tax on the nation’s fossil fuel production. They claim it could raise A$100 billion in its first year and put Australia at the forefront of the low-carbon revolution.

This proposal has been rejected by the federal government and the citizens as well. and the fossil fuel industry. The Greens have thrown their support behind the idea.

Garnot and Sims characterized their proposal as “Levi”. But it is essentially a tax, applied to one sector of the economy: exporters of fossil fuels such as coal and gas, as well as importers of oil and diesel.

Australia’s recent political history suggests that the road to a carbon tax is not smooth. However, as other countries race to restructure their economies for a low-carbon future, Australia risks being left behind. Whether or not to introduce a massive, economy-shaping tax on fossil fuels is up to Australia.

How will the plan work?

Presented by respected economists. Plan This week at the National Press Club. This includes a “carbon solution levy” applied to all fossil fuel extraction sites in Australia (about 105 sites) and all imports of fossil fuels into Australia. The tax is likely to be assessed according to the emissions produced by burning the fuel.

Garnott and Sims say the levy’s first-year revenue will exceed A$100 billion. They say the money should be spent on accelerating Australia’s renewable energy expansion, as well as subsidizing the development of low-carbon manufacturing for products such as steel and aluminium.

The money will also be spent on cost-of-living relief for consumers, such as relief on energy bills and removal of existing excise on petrol and diesel fuel.

Garnott told the National Press Club that the global transition to net zero was a huge opportunity that Australia should take advantage of, “We can use it to raise productivity and quality of life after a decade of stagnation.” Energy resources, land to deploy them, and land to sustainably grow biomass as an alternative to petroleum and coal for chemical production.”

“In a zero-carbon economy, Australia is economically the natural location to produce a significant proportion of the high-carbon manufactured products currently produced in Northeast Asia and Europe.”

And as Garnott also outlined in his speech, climate change threatens Australia’s economy, which is heavily dependent on fossil fuel exports.

Is levy a good idea?

Carbon dioxide emissions cause global warming, which harms the planet and its people. A carbon tax, or levy, aims to ensure that polluting companies pay for their losses. In theory, taxes make polluting production processes more expensive than alternatives, reducing demand for those products.

The world, including Australia, has committed to reaching net zero emissions by 2050. This is a big task and we need to act fast. Economists Largely agree A carbon tax is the most effective, least-cost way to reduce greenhouse gas emissions. So the proposal seems like good policy.

Australia had a carbon price, or tax, from 2012 to 2014. It was introduced by Labor but scrapped by the Abbott coalition government. The policy was working: the analysis showed that without metering, emissions in Australia’s national electricity market would have been 11 million to 17 million metric tonnes higher.

Of course, the right policy ideas are not always fruitful. After more than a decade of the so-called “climate wars” in Australia, the term ““Politically offensive.

Not surprisingly, the plan was proposed this week. Immediately rejected by Labor and the Nationals. Even less surprising was the sharp rebuke from business groups such as the Australian Chamber of Commerce and Industry and the fossil fuel lobby.

The rest of the world got the memo.

Putting a price on carbon is not a primary policy. Many countries Do so – either as a direct tax or Emission trading schemes.

Specifically, an EU from 2026 Tariffs on carbon-intensive imports will come into effect. Known as the “Carbon Border Adjustment Mechanism,” it means importers must report — and pay — for the emissions they produce when producing commodities like iron and steel.

The policy is designed to level the playing field for EU manufacturers who must pay fines for their pollution. Imports from countries that have a carbon price in place will be exempt from the tariff.

In the coming years, we can expect other jurisdictions to implement similar policies to protect their domestic industries. Australia must protect its export earnings by increasing its production of low-carbon goods, otherwise it will find itself stuck with expensive, emissions-intensive products that no one wants to buy.

It is also important to remember that Australia is a relatively small economy with little influence in world trade. To remain serious trading partners, we must come to the table with appropriate climate policies.

And finally, a carbon levy in Australia would ensure we keep the revenue for ourselves. The potential revenue is huge, and could be spent on raising the standard of living for all Australians.

My only real problem with the plan is the proposal to set the levy at the level of the EU’s five-year average carbon price, which is currently around $90 per metric ton. This left Australia at the mercy of economic conditions in Europe. We would be much wiser to set the price ourselves.

Will there ever be such a levy?

Garnot and Sims know their policy is a bold one — and there will be detractors. But as the world comes to terms with the economic reality of climate change, Australia risks being left behind.

As Garnott told the ABC, everyone is a winner under the plan, except for fossil fuel companies who, He admitted, “Gonna hate it.” This may be true. But Wreaking havoc on human communities, natural systems and the global economy. It is only fair that those responsible pay the damages.

The political hurdles are high, but not insurmountable. Australia already punishes polluting companies through safeguards, which impose strict restrictions on industrial emissions. Ten years ago, such a policy seemed unlikely, but here we are.

A carbon levy of the type proposed is a remarkably sensible way to reach net zero. This is a policy debate whose time has come. Let’s bring it on.

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Reference: Economists Propose $100 Billion-A-Year Fossil Fuel Tax: A Debate Australia Should Adopt (2024, February 18) Accessed on February 18, 2024 at https://phys.org/news/2024-02-economists-billion -year Retrieved from -fossil-fuel.html

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