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Australia’s carbon reversal sets new tone for global climate talks

Smoke billows from a steel plant near Sydney, this month. Australia’s government repealed its tax on major greenhouse gas polluters.

Rob Griffith/AP

Australian Prime Minister Tony Abbott's move to repeal his country's carbon tax provides an international boost for the Harper government, which has regularly attacked opponents who propose putting a price on emissions in Canada.

Australia's reversal on carbon pricing comes at a critical time, just two months prior to a United Nations climate summit to be hosted by secretary-General Ban Ki-Moon, who is looking for countries to commit to post-2020 emission reductions and new policies to achieve those targets.

And it comes as Prime Minister Stephen Harper faces continued pressure to impose some form of carbon pricing in Canada, particularly in the booming oil sands where rising emissions threaten to swamp the government's commitment to rein in carbon pollution.

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Mr. Abbott visited Canada last month, and Mr. Harper commended him for ending the "job-killing carbon tax" as the Australian had pledged during last year's general election in which he defeated the Labor Party-led coalition government. With their resource-based economies and relatively small populations occupying large land masses, Australia and Canada are among the world's top per-capita emitters of greenhouse gases (GHGs).

"Today the tax that you voted to get rid of is finally gone, a useless destructive tax which damaged jobs, which hurt families' cost of living and which didn't actually help the environment is finally gone," Mr. Abbott told Australians after the Senate voted 39-32 to repeal the levy.

"Canada applauds the decision by Prime Minister Abbott to repeal Australia's carbon tax," said PMO director of communications Jason MacDonald in an email. "Our government knows that carbon taxes raise the price of everything, including gas, groceries, and electricity."

Environmental advocates fear the two prime ministers will team up to block progress at international climate talks, while the Conservative government in Ottawa sees an ally that will speak up for energy-exporting developed countries.

"Having Australia go from a country which had one of the best carbon tax plans to one that has none sends the wrong signal to the world," Green Party Leader Elizabeth May said in an interview. "To say [the reversal] is demoralizing for the international effort is an understatement – it's sabotage."

A number of international agencies – from the World Bank, to the International Monetary Fund, to the Organization for Economic Co-operation and Development – have urged countries to adopt carbon pricing policies in order to reduce emissions and avoid the worst impacts of a changing climate.

"Climate change poses one of the greatest global challenges and threatens to roll back decades of development and prosperity," the World Bank said in a statement last month that urged countries and companies to support a carbon price. "Pricing carbon is inevitable if we are to produce a package of effective and cost-efficient policies to support scaled up mitigation," it said.

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The Harper government routinely accuses anyone who supports carbon prices as recklessly endangering the Canadian economy.

Liberal Leader Justin Trudeau spoke in Alberta earlier this month about the need for carbon pricing, arguing that the lack of such action was a key reason the U.S. has not approved the Keystone XL pipeline. Finance Minister Joe Oliver immediately slammed his plan as a "multibillion tax on everything" that will "undermine our international competitiveness."

However, there are a variety of ways a carbon price could be imposed. Some jurisdictions, including British Columbia, imposed a straight levy on carbon emissions after cutting other taxes. Others, such as the European Union, have a cap on emissions that requires companies to buy and sell credits. China has launched six pilot emission trading schemes in four cities and two provinces.

Since introducing the tax in 2008, B.C. has seen its transportation fuel use drop 16 per cent, while in the rest of Canada it has risen 3 per cent, said Stewart Elgie, chair of the Sustainable Prosperity institute based at the University of Ottawa. At the same time, the B.C. economy has slightly outperformed the Canadian average.

"The idea that a carbon tax hurts the economy is a myth," Mr. Elgie said in an interview. "It's a smart way to tackle climate change without hurting the economy, and even helping it by preparing us for future economic success in a low-carbon world."

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About the Author
Global Energy Reporter

Shawn McCarthy is an Ottawa-based, national business correspondent for The Globe and Mail, covering a global energy beat. He writes on various aspects of the international energy industry, from oil and gas production and refining, to the development of new technologies, to the business implications of climate-change regulations. More

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