Solutions : Carbon Pricing
Most Australians, most businesses, and national political leaders agree that we need to deal with climate change responsibly.
The most important thing we need to do is to reduce greenhouse gas emissions and invest in cleaner forms of energy to power our economy.
Any solution will have costs – what we can do is choose the most cost-effective solutions.
Currently no-one pays for the carbon pollution in the short term. However, in the long term we will all pay for the impacts of climate change. That means that the full cost of doing business is not currently factored into production – but someone does pay for it: us, our environment, and future generations.
Putting a price on carbon pollution is about creating an incentive across the economy to reduce pollution and invest in clean energy. A price is imposed on each tonne of carbon pollution released by the heaviest polluting companies. This creates a strong incentive for these companies to rein in pollution and become more efficient, as well as to invest in clean energy.
Costs are passed through to businesses and finally to consumers. This means that everyone has a financial incentive to save energy and shift to cleaner alternatives. The pool of funds raised by a carbon price can then be recycled to assist households, workers and regions with the transition, as well as to support clean energy technologies. Usually care is taken to ensure that jobs and investment in export businesses, or those competing with imports, are not unfairly disadvantaged compared to their international competitors.
Evidence from around the world shows that putting a price on carbon is a cost-effective way to drive reductions in emissions and investment in cleaner energy technologies – read the Commission’s short overview on carbon pricing for more information.
- 5 December 2012 - Adelaide community forum