Australian PM faces stiff opposition against her radical carbon polices!

Australian Prime Minister Julia Gillard faces stiff opposition from the public, business and politicians to her radical carbon tax policies. Her newly announced policies that will see the nation’s top 500 greenhouse-gas polluters, hit by a crippling new carbon tax. Gillard’s coalition government plans to set the new carbon tax initially at $23 a tonne, which will then increase by 5% per year before moving to a market price system in three years’ time.

It is not surprising that there is opposition from business as it will increase operating costs and reduce their ability to compete with rivals abroad. The Australian mining industry predicts that 126,000 jobs could be lost, unless this new carbon tax is phased in.

However, the public are most concerned at the prospect of their electricity bills increasing by $10 per week, which will hit the 8 million low-income earners. It is not surprising opinion polls are reporting 60% of voters are against Canberra’s proposals. Nevertheless, the government has promised to spend $15 billion in compensation to help the country’s 8 million low-income earners in order to reduce the impact of the new measures significantly on them.

Presently, Australian consumers enjoy some of the world’s lowest electricity prices, due to its vast reserves of easily accessible coal and gas reserves. Currently, the county's power sector depends on 58% of its fuel from coal and 30% from gas power generation. However, power prices were likely to increase anyway for the following reasons:

The majority of the country’s coal power stations are in urgent need of replacement, since many are 20 plus years old and not up to current operating and environmental standards.
The gap between domestic fuel prices and international market prices for power generation coal and gas has begun to decrease.
The lack of a fully open nationwide integrated competitive power trading market is a likely factor in future power price increases for customers, suggests Ross Garnaut recent federal government report on reforming the electricity sector.
For promoters behind the development of cleaner coal emissions equipment, the new policies will help aid in attracting the investment required to speed up making this product commercially viable and available to power station operators world wide.

Nevertheless, for the nation’s renewables sector, it creates a more favourable and secure investment climate in order to exploit the nation's extraordinary wind, wave, solar and geothermal resources for power generation. The government target is that renewables will supply 20% of the nation’s needs by 2020. At present, renewables supply about 7% of market needs, reports Pennwell Global Power Review 2011.

Investor’s reaction has been largely positive; many domestic and foreign investors have welcomed the government policies as it creates the long-term certainty that was lacking before. In addition, environmentalists have seen adoption of such policies as the first decisive step on the road to Australia becoming a low-carbon economy.

However, as other countries have found achieving such ambitions are likely to prove more difficult than expected. Already, due to the current budgetary problems various Australian states are having to cut back public investment in research into new innovative technology.

As an energy expert I will find the next few years very interesting!