Over half the money raised from the carbon price is being used to assist households.
Supporting jobs and industry
Jobs will be supported by extensive assistance to businesses affected by a carbon price.
A Jobs and Competitiveness Program will provide around $11.3 billion of assistance over the first five years of the carbon pricing mechanism to safeguard jobs in industries which face international competition and produce a lot of pollution.
Manufacturing industry will be assisted by tailored programs worth $500 million for steel manufacturers, food processors and metal foundries and forgers.
An $800 million grants program will help manufacturers invest in low pollution technologies.
A Coal Sector Jobs Package will provide $983 million in assistance to support coal mining jobs.
These programs will support jobs and keep Australian industry strong while creating incentives to invest in clean energy and energy efficiency. This will ensure the Australian economy remains competitive in a world which is moving to reduce carbon pollution.
Why Australia needs to put a price on carbon pollution
Australia faces significant environmental and economic costs in a warmer, more unstable climate.
Early global action is cheaper than later action, and in a world moving to tackle climate change economies that defer action face higher long-term costs.
A number of studies in Australia and around the world have demonstrated that with existing technologies pollution can be reduced without slowing economic growth. Retooling our economy for a clean energy future will deliver new technologies, new jobs and new opportunities.
Jobs and Competitiveness Program
The Government recognises the importance of manufacturing and heavy industries which compete in international markets and use large amounts of energy or generate significant levels of carbon pollution. The goods these industries produce will remain essential in a clean energy economy. We need steel for our buildings and rail transport. Cement slabs can make houses more energy efficient as can glass used for double glazing.
The Jobs and Competitiveness Program has been designed to provide assistance to the most emissions-intensive activities in the economy that are highly exposed to international competition—either on export markets or from importers.
There will be two categories of assistance. The most emissions-intensive and trade-exposed activities will initially be eligible for 94.5 per cent shielding from the carbon price. A second category of assistance will provide an initial shielding level of 66 per cent of the carbon price.
While the assistance will shield some industries from the full impact of the carbon price, it will be structured to ensure that it still rewards those businesses that reduce their pollution in the future.
Further details on the Jobs and Competiveness Program can be found in the Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education website .
Keeping Australian manufacturing strong
Manufacturing businesses which are less emissions-intensive are able to apply for assistance under the Clean Technology Programs and Ener. This support will assist manufacturing businesses to improve their energy efficiency and reduce their exposure to changing electricity prices.
Clean Technology Investment Program
The $800 million Clean Technology Investment Program is providing grants to manufacturers to support investments in energy efficient capital equipment and low-pollution technologies, processes and products. These grants are providing practical assistance to manufacturing businesses, while supporting the incentives created by the carbon price to improve energy efficiency or use of energy from cleaner sources.
Manufacturing businesses with facilities that use more than 300 megawatt hours of electricity or five terajoules of natural gas a year, or are covered by the carbon pricing mechanism, are eligible to apply for grants under this program.
Funding is be provided on a co-investment basis. This investment is to help modernise parts of the Australian manufacturing sector and assist manufacturers compete in a low-pollution world, with benefits for the job security of manufacturing workers.
In the 2013-14 Budget, the Government decided to bring forward $160 million of funding allocated to the Clean Technology Program into 2014-15, from 2015-16 and 2016-17. Industry will be able to access support for clean technology investment and research and development projects earlier than would have otherwise been the case.
Clean Technology Food and Foundries Investment Program
Special assistance is being provided to the food processing, metal forging and foundry industries. These industries are trade-exposed and have somewhat higher exposure to energy costs than general manufacturing businesses.
Through the Food and Foundries Investment Program, the Government will provide grants worth up to $150 million over six years to the food processing industry and up to $50 million over six years to the metal forging and foundry industries. These grants will assist the industries to invest in energy efficient equipment and low-pollution technologies, processes and products.
All businesses in the food processing, metal forging and foundry industries are able to apply for funding under this program. These industries are important to specific rural and regional areas and the Government wants to see these industries prosper while the world moves to a clean energy future.
Funding will be provided on a co-investment basis, with industry contributing on average three dollars for every dollar from the Government.
Steel industry assistance*
Australian steel makers face pressures from factors other than a carbon price, including higher exchange rates, increases in raw material costs and lower growth rates in the Australian construction industry.
The Government will provide assistance worth $300 million over four years to encourage investment and innovation in the Australian steel manufacturing industry through the Steel Transformation Plan. This will help the sector transform into an increasingly efficient and economically sustainable industry in a low-pollution economy.
Support for coal mines: Coal Sector Jobs Package*
The $983 million Coal Sector Jobs Package is providing 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.
Coal Mining Abatement Technology Support Package*
The Coal Mining Abatement Technology Support Package is providing support for the development and deployment of technologies to reduce fugitive emissions from coal mines.
It provides support for the research, development and deployment of abatement technologies in the coal sector. There is an emphasis on assisting small to medium miners to reduce their emissions by implementing new abatement technologies, equipment and processes.
Funding is provided via matched grants for the research and demonstration of new technologies, and grants on a two to one basis to assist smaller coal mines in developing abatement plans and technologies.
Support for small business
The Government recognises the contribution of the small business sector to the Australian economy. Small businesses are not directly liable for the carbon price. However the Government has introduced measures to assist small firms with the transition to a clean energy future. This assistance includes increasing the small business instant asset write-off threshold to $6,500 to free up cash flow and help small business owners invest in new assets, including those that improve energy efficiency. More details of support for small business can be found in a separate fact sheet.
Adapting to climate change at low cost
The Government has a range of measures in place to help Australia’s manufacturing and resource-rich regions adapt to a clean energy future and become leaders in sustainable resource use.
Affected regions have the opportunity to lead in the research, training and implementation of technologies and practices that will enable the more sustainable use of resources such as coal and water. Innovation and development of clean technologies in the manufacturing and resource sectors will help regional universities grow and bring more opportunities for service sector expansion and professional occupations.
The Government is boosting clean and renewable energy through the new $10 billion Clean Energy Finance Corporation. The Clean Energy Finance Corporation will assist businesses seeking funds to get innovative clean energy proposals and technologies off the ground and commercialise clean energy projects. A great deal of this investment is expected to flow through to regional and rural Australia.
The sustainable use of Australia’s resources is highly important for each region’s economic resilience.
Examples of opportunities in the Gippsland region
The Regional Development Australia Committee for Gippsland is working with key stakeholders to harness opportunities and address major challenges to improving liveability, productivity and sustainability. Priorities for the region include planning for a low carbon economy and exploring options for establishing a Centre for Sustainable Technologies at Monash University’s Gippsland Campus.
Planning for climate change is also being assisted by ClimateWorks Australia, who have developed a Low Carbon Growth Plan for Gippsland identifying low-cost carbon pollution savings, as well as the University of Melbourne and Victorian Department of Primary Industry, who are providing information and solutions to assist the Latrobe Valley adapt to climate change.
Key elements of a carbon price
A carbon price provides incentives to reduce emissions where they are cheapest, breaking the link between economic growth and growth in pollution.
Treasury modelling demonstrates that the cost to Australia of cutting pollution and transforming our economy to cleaner energy sources is very modest. The Australian economy continues to grow, jobs continue to grow and average incomes continue to grow under carbon pricing.
A carbon price is not a tax on households—under 400 of the biggest polluters in Australia are required to pay for their pollution under the carbon pricing mechanism.
The carbon price commenced on 1 July 2012, with a fixed price for the first three years. The price started at $23 per tonne and will rise at 2.5 per cent per annum in real terms.
From 1 July 2015 onwards, the carbon price will be set by the market. This will be the flexible price stage.
The Government has agreed to link Australia’s emissions trading scheme with the European Union Emissions Trading System. Under this arrangement, European allowance units may be used for compliance under the Australian scheme for liabilities incurred between 1 July 2015 and 30 June 2018. This will be followed by a full link from 1 July 2018 where units from both schemes may be used for compliance in either system.
For further information, call 1800 057 590.