Over half the money raised from the carbon price is being used to assist households.
An overview of the Clean Energy Legislative Package
Carbon pricing mechanism
Carbon price: a two-stage approach:
1. Fixed price period—The carbon pricing mechanism commenced on 1 July 2012, with a price that is fixed for the first three years. The price starts at $23 per tonne and will rise at 2.5 per cent each year in real terms.
2. Emissions trading scheme—On 1 July 2015, the carbon price will transition to a fully flexible price under an emissions trading scheme, with the price determined by the market.
Broad coverage from commencement, encompassing the stationary energy sector, transport (as described below), industrial processes, non-legacy waste, and fugitive emissions. Only landfill facilities with direct emissions of 25,000 tonnes CO2-e a year or more are liable under the carbon price. A carbon price does not apply to household transport fuels, light vehicle business transport and off-road fuel use by the agriculture, forestry and fishing industries. An effective carbon price is applied to domestic aviation, domestic shipping, rail transport, and non-transport use of fuels. Users of these fuels can opt-in to the mechanism under the Opt-in Scheme.
International linking to credible international carbon markets and emissions trading schemes from the commencement of the flexible price period. At least half of a liable partys compliance obligation must be met through the use of domestic permits or credits.
The $9.2 billion Jobs and Competitiveness Program provides significant support for jobs and protects the competitiveness of these emissions-intensive trade-exposed industries. The Program also ensures that industry, local communities and workers have a smooth transition to a clean energy future and that these industries have a strong incentive to reduce their carbon pollution.
An Energy Security Fund has been established to ensure there is a smooth transition which preserves energy security. The Energy Security Fund comprises two elements:
- An allocation of free carbon units and cash payments to strongly affected coal-fired electricity generators. These allocations are conditional on electricity generators strongly affected by a carbon price publishing Clean Energy Investment Plans, which show how they will reduce their pollution, and by meeting power system reliability standards.
- The Government is seeking to negotiate the closure of around 2,000 megawatts (MW) of highly polluting generation capacity by 2020. Closing down some of our highest polluting coal-fired generation capacity makes room for investment in lower pollution plants—and kick starts the transformation of our energy industry in a managed way.
Assistance for Australian households, through tax cuts and increased payments, to help them with increased living costs as a result of the introduction of a carbon price.
Climate Change Authority—advises on pollution caps, tracks Australia’s pollution levels and progresses towards meeting targets and undertake reviews of the carbon pricing mechanism.
Clean Energy Regulator—administers the carbon pricing mechanism, the existing regulatory functions for the National Greenhouse and Energy Reporting Scheme, the Renewable Energy Target and the Carbon Farming Initiative.
Productivity Commission—undertakes reviews relating to industry assistance, and carbon pollution reduction activities in other countries.
Land Sector Carbon and Biodiversity Advisory Board—reviews and oversee land sector initiatives, providing advice to Government and ensuring the effectiveness of assistance.
Energy Security Council—advises the Government on any emerging risks to energy security and may offer loans to coal-fired electricity generators for the refinancing of existing debt.
Related Clean Energy Future programs
Assisting manufacturing and energy efficiency
A range of new and existing measures to encourage energy efficiency are targeted at households, businesses, communities, Government, buildings and transport.
The Government is delivering the $1.2 billion Clean Technology Program, over and above the Jobs and Competitiveness Program, to help directly improve energy efficiency and reduce carbon pollution in manufacturing industries and support research and development in low pollution technologies.
The $300 million Steel Transformation Plan supports and assists the industry transition to a clean energy future, and recognises the pressures currently facing this industry.
The $1.3 billion Coal Sector Jobs Package provides transitional assistance to help the coal industry to implement carbon abatement technologies for the mines that produce the most carbon pollution. The amount of carbon pollution produced by coal mines varies greatly, so the fairest way to deliver assistance is to target assistance at those mines that are most impacted by the introduction of the carbon price.
Over $13 billion is being invested in clean energy projects, including through the Clean Energy Finance Corporation. In combination with the carbon price and Renewable Energy Target, this investment is driving the biggest expansion in the clean energy sector in Australias history.
Clean Energy Finance Corporation—invests in the commercialisation and deployment of renewable and clean energy projects.
Australian Renewable Energy Agency—improves the competitiveness of renewable energy and related technologies through supporting renewable energy technology innovation.
Incentives for the farming, forestry and land sectors to reduce carbon pollution and increase the amount of carbon stored on the land. Includes a range of measures such as funding for biodiverse carbon stores and policies to help farmers and land managers make the most of carbon farming opportunities. These measures will complement the Carbon Farming Initiative.