Australia on Sunday joined a growing number of nations to impose a price on carbon emissions as well as imposed long awaited 30% Mineral Resource Tax

Australia is charging its largest polluters for carbon emissions and taxing profits of iron ore and coal producers starting today in the biggest change since 2000 in how the government collects and spends money.

Australia's biggest polluters, from coal fired power stations to smelters, will initially pay AUD 23 per tonne of carbon dioxide emitted, more than twice the cost of carbon pollution in the European Union, currently trading around EUR 8.15 (AUD 10) a tonne.

Mining companies including BHP Billiton Ltd. and Rio Tinto Ltd. face a separate levy on 30% of earnings from iron starting today.

Carbon pricing is Australia’s main tool for meeting its target of a 5% cut in emissions from 2000 levels by 2020. The levy will be fixed until 2015, when the country plans to introduce a market based system.

Prime Minister Julia Gillard's minority government says the plan is needed to fight climate change and curb greenhouse gas pollution. Australia has amongst the world's highest per capita CO2 emissions due to its reliance on coal fired power stations.

Yet even as it starts, the scheme's future is in doubt. The conservative opposition has vowed to repeal it if they win power in elections due by late next year and have whipped up a scare campaign saying the tax will cost jobs and hurt the economy.

Australia expects to raise AUD 24.7 billion over four years from the carbon levy.

UBS AG said in a report dated June 22 “Australia’s mining tax will raise less than half the amount forecast by its Treasury in the next two years and reduce profit estimates for groups including BHP and Rio. Companies will pay AUD 1.8 billion in the 2013 fiscal year and AUD 1.4 billion in 2014, compared with government forecasts for revenue from the tax of AUD 6.5 billion in both years.”

Source - Reuters & Bloomberg

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