Isra-Mart srl:Australia launches latest attempt to price carbon

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Will it be a case of third time lucky for Australia's efforts to put a price on carbon emissions?

The Labor-led coalition government will certainly be hoping so after it today launched a third attempt to put a price on carbon, unveiling plans for a carbon tax that will come into effect from mid-2012.

Prime minister Julia Gillard – who last year ousted her predecessor Kevin Rudd and triggered an early election in the wake of the Labor government twice failing to pass a climate change bill – announced plans to impose a fixed carbon tax on heavy emitters from July 2012 before moving on to a carbon trading mechanism within five years.

"This is an essential economic reform, and it is the right thing to do," Gillard told reporters, highlighting how the recent devastating droughts and floods experienced by the country demonstrated the vital need to tackle climate change.

The proposals will be fiercely opposed by the Liberal Party, which twice defeated Labor efforts to introduce an emissions trading scheme during the previous parliament.

Liberal leader Tony Abbott, who has in the past expressed scepticism over the causes of climate change, slammed the new proposals. "We will fight this tax every second of every minute of every day of every week of every month," he said. "I think there will be a people's revolt against this carbon tax. I don't believe it will ever happen."

However, Gillard insisted she will take the fight to Abbott, vowing that she was "not intending to take a backwards step" in the upcoming debate over the proposals.

The coalition government only enjoys a narrow majority, but the new proposals have secured the support of a handful of independent and Green MPs, some of whom opposed previous carbon pricing proposals on the grounds that they were too modest.

The focus will now shift to the precise details regarding the level at which the carbon levy will be set, which firms will be covered, and how it will transition into a market-based mechanism.

Gillard will face a delicate balancing act if she is to find a compromise agreement that secures the continued support of the Greens, while satisfying rural independents and members of her own party concerned the levy will lead to rising energy prices.

Meanwhile, the price of electricity futures for the calendar year of 2012 jumped almost 10 per cent amidst fears the tax will hit the country's coal producers.