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Details Of The Proposed Carbon Pricing Mechanism

The Multi-Party Climate Change Committee has proposed a carbon price leading to an emissions trading scheme.

The carbon price is to take effect from July 1, 2012. A fixed price will operate for 3-5 years, after which a full cap and trade emissions trading scheme will take its place.

Details of the Carbon Price Mechanism are shown below.

Statement from Prime Minister Julia Gillard and Climate Change and Energy Efficiency Minister Greg Combet.

Climate change framework announced

The Prime Minister Julia Gillard today outlined the Government’s plan to cut pollution, tackle climate change and deliver the economic reform Australia needs to move to a clean energy future.

This is an essential economic reform, and it is the right thing to do.

The two-stage plan for a carbon price mechanism will start with a fixed price period for three to five years before transitioning to an emissions trading scheme.

The Government will propose that the carbon price commences on 1 July 2012, subject to the ability to negotiate agreement with a majority in both houses of Parliament and pass legislation this year.

A carbon price is a price on pollution. It is the cheapest and fairest way to cut pollution and build a clean energy economy. The best way to stop businesses polluting and get them to invest in clean energy is to charge them when they pollute.

The businesses with the highest levels of pollution will have a very strong incentive to reduce their pollution.

The Government will then use every cent raised to:

  • Assist families with household bills
  • Help businesses make the transition to a clean energy economy
  • Tackle climate change

The Government will not shy away from this difficult but vital economic reform to move Australia to a clean energy nation.

The global economy is shifting.

Right now, Australia is at risk of falling behind the rest of the world. The longer we wait, the greater the cost to the economy, and the greater the cost to Australian jobs.

An initial fixed carbon price will provide businesses with a stable and predictable platform to transition to a ‘cap and trade’ emissions trading scheme that will be linked to international carbon markets.

This will give businesses time to understand their carbon liability and begin the transformation in a steady and purposeful way.

Today’s proposal is the result of hard work by the Multi-Party Climate Change Committee which has been meeting co-operatively, determined to help deliver this crucial economic reform.

The framework has been agreed by Government and Greens members of the Multi-Party Climate Change Committee (MPCCC). The other members, Mr Tony Windsor and Mr Robert Oakeshott, have agreed that the proposal should be released for community consultation.

The Committee will continue to discuss other important elements of the proposal including the starting level of the fixed price, any phasing in of sectors of the economy, and assistance for both households and industry.

The document outlining the proposed carbon price mechanism is available below.

Members of the public and interested parties who wish to provide input on this approach should contact:, or write to:

The Multi-Party Climate Change Committee Secretariat
GPO Box 854
Canberra ACT 2601

Further information in relation to this proposed approach is available at

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Malcolm Farnsworth
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