Australia Carbon Price To Have Small Impact On GNP: Government

Rob Taylor and James Grubel PlanetArk 7 Jun 11;

Australian plans to put a price on carbon emissions won't stop the nation's strong economic growth and will have only a small impact on incomes, according to Treasury modeling to be unveiled by Treasurer Wayne Swan on Tuesday.

The carbon price is a key policy which could make or break Prime Minister Julia Gillard's minority government, which relies on support from the Greens and three independents for its one-seat parliamentary majority.

The government is struggling to sell its climate policy, in the face of opposition claims that it will drive up the cost of living and trigger job losses.

Swan will spell out Labor's argument for a carbon tax and eventual emissions trading scheme in a speech to the National Press Club, and he will release new modeling on the impact of a carbon price.

"Our economy will continue to grow solidly while making deep cuts in carbon pollution," Swan will say, according to excerpts of his speech obtained by Reuters.

"The modeling will show real national income growing strongly under a carbon price, at an average annual rate per person of around 1.1 percent until 2050.

"This means a carbon price would only reduce annual growth in GNP per person by about one tenth of one percentage point."

Swan's speech says Treasury modeling will show real national income per person would be 16 percent higher by 2020, and about 56 percent higher by 2050.

Gillard plans to introduce a carbon tax on 1,000 of the country's biggest polluters from July 2012, with a move to an emissions trading scheme three to five years later.

Australia has one of the world's highest per capital levels of greenhouse gas emissions because of reliance on aging coal-fired power stations for 80 percent of its electricity.

But the government is facing a tough fight to win over voters, with a new Galaxy poll showing 58 percent of Australians opposed emissions pricing and 64 percent wanted new elections to be fought on climate policy.

Only 24 percent of respondents believed Gillard had a mandate from a dead-heat election last year to introduce a carbon price, while 73 percent expected to be financially worse off under the scheme.

Thousands of carbon price backers rallied in major cities across the country over the weekend, hoping to counter similar recent demonstrations by opponents of the tax.

Swan has already promoted the benefits of a carbon price on the switch from coal-fired electricity to cleaner gas-fired electricity for Australia.

"Treasury modeling shows a carbon price will see gas-fired electricity generation expand by between 150 and 300 percent over the period to 2050," Swan said in a weekly economic note.

Australia is a major producer and exporter of thermal coal, but is also expected to see gas production soar with a series of massive coal-seam gas projects in the works.

"Dirty energy will become more expensive and clean energy cheaper under a carbon price, creating the jobs of the future and helping to protect our environment and our economy," Swan said.

But mining firms warned last week that the planned carbon pollution cutting scheme would slash investment, output and jobs, and demanded the minority government enter talks to recast its ideas.

Australia says economy stronger with carbon tax
Yahoo News 7 Jun 11;

SYDNEY (AFP) – Australia's economy will continue to grow strongly if a carbon price is introduced, Treasurer Wayne Swan said Tuesday and warned of a possible backlash over coal exports if Canberra failed to act.

Making deep cuts in carbon pollution would not cripple the economy, with modelling showing growth in real national income rising at an average annual rate of 1.1 percent per person until 2050 with a carbon tax, he said.

This compares with growth of 1.2 percent without a levy on pollution.

"Don't believe the vested interests who argue Australia must choose between a stronger economy and decent environmental outcomes," Swan told the National Press Club.

"Jobs will still be created, industries will prosper, and our economy will continue to grow strongly with a carbon price."

Swan said employment would also continue to grow if the government proceeded with its plans to place a pricing mechanism on pollution, with modelling showing no significant difference if a carbon tax was introduced.

"By 2020, national employment is projected to increase by 1.6 million jobs, while at the same time growth in domestically-produced pollution slows," he said.

The treasurer said Australia was the world's worst per capita carbon emitter and could not afford to be left behind as other countries transformed their economies to reduce emissions blamed for global warming.

"No first-rate, first-world economy will be anything other than a clean-energy economy into the future," he said.

While the world would continue to burn Australian coal, a major export for the economy, the nation also needed to export technology that would make the fossil fuel more viable in the future, he added.

"Today Australia has a relatively low-emission coal sector, and we expect it to continue to grow as the world moves to cut its emissions," he said.

"But if we don't innovate further, we run the risk that the rest of world will impose a penalty on our exports in the future."

The centre-left Labor government of Prime Minister Julia Gillard wants to introduce a tax on 1,000 major industrial carbon polluters by mid-2012, with this giving way to a market-based mechanism within 3-5 years.

But the plan has been attacked by the conservative opposition, which claims it will send jobs offshore, hurt industry and raise the cost of living for Australians who will face higher energy costs.

Swan said a report by the Productivity Commission to be released Thursday would show that seven of Australia's top 10 trading partners have already adopted policies to reduce pollution and support clean energy.

"The approaches vary from country to country, but the report will make it clear that market mechanisms are a far more cost-effective way than other approaches like regulation and subsidies," he said.