FAQs

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What is the carbon tax?

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On Sunday the 10th of July, 2012, the Government released details about the new Clean Energy Agreement that aims to reduce the country's emissions by 5% of 2000 levels by 2020. This will be achieved by introducing a fixed price on carbon pollution on the 1st of July, 2012. The price will be AU$23 per tonne CO2e (rising at 2.5% per annum).

Preceding this, on 1st July 2015, an emissions trading scheme will be introduced meaning the price of carbon will be flexible and will be determined by the market. There will be a price ceiling and floor that will apply for the first three years of the flexible price period. The price ceiling will be set at $20 above the expected international price and will rise by 5% each year. The price floor will be $15 rising annually by 4%.

Who Pays the Tax?

The top 500 highest emitting companies are liable under the carbon tax. In total, 0.02% of Australia's 3 million companies will have to pay the carbon tax. All agriculture and forestry activities are excluded from the scheme.

Initially the carbon pollution tax will cover approximately 60% of Australia's emissions (360M t per annum) in the stationary energy sector, transport, industrial processes, non-legacy waste and fugitive emission.

Where Does the Money Go? 

The government will use the money raised through the tax to compensate 90% of households in some way, 70% of which will be fully compensated through tax cuts or through increased family payments.

How is the Carbon Tax and Carbon Farming Initiative Connected? 

The Carbon Farming Initiative will play a major role in efforts to reduce Australia's emissions within a limited time. Companies are able to use Kyoto-compliant Australian Carbon Credit Units (ACCUs) created under the CFI to meet their obligations under the new plan.

For those who are still unsure about how exactly a price on carbon works, watch this video for a simple explanation.

For anyone wanting to find out more about the Carbon Farming Initiative, feel free to contact us at anytime.