Breaking down the carbon jargon
A HIGHLY complex economic reform is facing the country but few people understand exactly what a tax on carbon means and how it works.
Scott Niblock, of the Southern Cross University Business School, did his thesis on the European carbon emissions scheme and helped the Tweed Daily News break down the carbon jargon yesterday.
“The government has targets for the amount of carbon emissions the country produces each year. A tax would help the government control those emissions,” Mr Niblock said.
“The government is effectively putting a price on carbon per tonne to encourage companies to use green energy as a cheaper alternative.”
However, this fixed price set by the government is different to emission trading schemes used in other parts of the world.
In an emissions trading scheme, the government releases a capped number of permits for emissions and companies can buy and sell these permits depending on how many they need.
“The idea is the government will then reduce the number of permits, making them more expensive, which will force companies to move to greener sources of energy,” Mr Niblock said.
“It rewards companies who do not have a high level of emissions as they are able to sell their excess permits.”
Individual countries could then link their trading schemes creating a worldwide carbon trading network.
So why did our government choose a carbon tax over an emissions trading scheme?
“There are a lot of issues,” Mr Niblock said.
“The government will likely introduce a fixed price tax for three to five years while they monitor trading schemes around the world. Then they could convert to a cap-and-trade scheme.”
Mr Niblock said the government still hadn’t decided on a fixed price.
“Businesses can’t commit to cleaner technology when they don’t know the price.”