Australia to set tax on carbon gas

A planned tax on carbon gas emitting industries in Australia would be far below a recommended price that might have forced polluters to switch to greener technology, the government said today.

The still-undetermined starting tax, expected to be announced in July, would be "well south" of 40 Australian dollars (US$42) a metric ton (AU$44 a U.S. ton), Climate Change Minister Greg Combet said.

A consultant to the government described that amount as the tipping point where the tax would force power generators to switch from coal to cleaner gas technology, the Sydney Morning Herald reported.

"There are other views in the electricity-generating industry about what would happen at different price scenarios," Combet told reporters. The consultant's report will be made public Wednesday.

Australia is one of the world's worst greenhouse gas polluters per capita because it relies heavily on its abundant coal reserves for electricity.

Prime Minister Julia Gillard announced in February that a carbon tax will be applied to Australia's biggest industrial polluters from July 1, 2012.

Contentious details still undecided include the tax price and how much to compensate hard-hit industries and householders as they make the transition.

The carbon tax would be the main tool to meet the government's pledge to reduce Australia's greenhouse gas emissions by the year 2020 to at least by 5 percent below 2000 levels.

But Gillard's Labor Party does not hold a majority in either parliament chamber so will need the support of independents and the minor Greens party to make the tax a reality.

Australia and the United States had been the only industrialized countries to refuse to accept reduction targets on carbon emissions until the center-left Labor Party was elected in Australia in 2007. But Labor's attempts to pass such legislation have failed.

The main opposition party opposes the tax, arguing it would add to the cost of living for ordinary Australians.

The government says the revenue received from the tax will be paid back to low-income householders as compensation for the price rises.