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"Australia votes to repeal carbon tax," BBC
"New senators were sworn in this month."
7/16/14, "Australia Scraps Carbon Price as Abbott Meets Election Vow," Bloomberg, Jason Scott
"Australia's Senate voted to scrap
the nation’s price on carbon, fulfilling a key election pledge
by Prime Minister Tony Abbott and leaving the nation without an
approved mechanism to tackle emissions.
The repeal bill was passed 39 votes to 32 in the 76-member
upper house today, dismantling a law introduced by the previous
Labor government that initially charged polluters A$23 ($21.50)
per ton of greenhouse gases emitted.
Repealing the carbon price may put Australia, which is
hosting the Group of 20 nations summit in November, at
loggerheads with President Barack Obama who is seeking to form
a worldwide agreement to combat climate change. Australia, the
world’s biggest emitter of fossil fuels per capita, hasn’t
backed U.S. calls to add the issue to the G-20 agenda when
leaders meet in Brisbane.
“Abbott campaigned so hard for so long to get rid of the
carbon tax, which has been pretty unpopular with voters, that
the repeal will be seen as a big victory domestically,” said
Zareh Ghazarian, a Melbourne-based professor at the Monash
University School of Political and Social Inquiry. “In
international diplomatic circles, it’s a different matter. It
may cause discomfort to the government during Obama’s visit
later this year.”
The repeal will save the average family A$550 a year
through lower electricity prices and make Australian companies
more competitive, Abbott said in an e-mailed statement after the
vote. December electricity futures in New South Wales,
Australia’s most populous state, slipped 2.2 percent to A$31.55
per megawatt hour as of 12 p.m. in Sydney, the lowest in a week.
The benchmark SandP/ASX 200 Index rose 0.4 percent, heading
for the highest close since June 2008.
The repeal was “widely anticipated” and “should be
reasonably neutral” to the stock market, Matt Riordan, a
Sydney-based portfolio manager who helps oversee about $7.5
billion at Paradice Investment Management Pty., said by phone.
Today’s vote to repeal the carbon price comes a week after the government’s second bid to abolish the mechanism was blocked
in the upper house. Clive Palmer, the mining magnate whose party
Abbott has to deal with in the Senate to pass legislation, on
July 10 said his three Senators wouldn’t support it without
amendments that force energy companies to pass on savings to
consumers.
While repealing the carbon-price mechanism is a victory for
Abbott’s Liberal-National coalition, his government may still
struggle with other climate change measures in the Senate. Palmer has said his Palmer United Party will vote against
Abbott’s Direct Action Plan, which includes a A$2.55 billion
Emissions Reduction Fund to encourage companies to cut
greenhouse gases through taxpayer-funded grants.
Palmer has also said his three PUP senators will block
plans to abolish the Clean Energy Finance Corp., which helps
fund renewable energy projects, and the Climate Change
Authority, which provides advice on the carbon price and
emissions reduction targets.
“Australia now has no formal mechanism in place to reduce
emissions,” Kobad Bhavnagri, the Sydney-based head of Australia
research at Bloomberg New Energy Finance, said in a Bloomberg
television interview today.
The carbon price came into force in July 2012. It was fixed
at A$23 per ton of greenhouse gases emitted in its first year,
rising every year until it was due to shift to a market-set
mechanism from July 2015.
Labor and the Greens party, who held the balance of power
in the upper house before new senators were sworn in this month,
rejected the government’s first attempt to scrap the carbon
price in March. The opposition will campaign in the next election, due to
be called by 2016, to reinstate an emissions-trading system,
Labor leader Bill Shorten said today.
“Tony Abbott has made Australia the first country to
reverse action on climate change,” Shorten said in an e-mailed
statement. “History will judge Tony Abbott harshly for refusing
to believe that action is needed on climate change.”
Australia, the world’s 12th-largest economy, will still be
able to meet its promised 5 percent reduction in emissions by
2020, the government says.
Business groups welcomed today’s repeal, with the
Australian Petroleum Production & Exploration Association saying
it would remove a cost for liquefied natural gas exporters that
international competitors don’t face.
The Australian Retailers Association said it would “assist
the sector to overcome pressures from excessive costs and be a
boost to current low consumer confidence.”
AGL Energy Ltd. shares dropped 3.2 percent to A$15.27,
poised for the biggest one-day fall since May 2013. The
Melbourne-based company said the repeal will reduce earnings
before interest and tax by about A$186 million in the 2015
financial year as it loses government subsidies for its Loy Yang
coal-fired power station and lower wholesale electricity prices
crimp earnings from renewable energy and gas generation assets.
The repeal would increase the plant’s long-term value, it said.
Obama discussed climate change with Abbott when they met in
the White House on June 12 during the Australian prime
minister’s first trip to the U.S. since winning the September
election.
The [US] president is seeking state-by-state limitations in the
U.S. on carbon-dioxide emissions to limit the effects of man-made global warming and has proposed cutting power-plant
emissions by 30 percent by 2030 from 2005 levels."
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