Australia's Carbon Pricing Scheme

The Carbon Pricing Scheme, to be implemented in Australia via the Clean Energy Bill 2011 (Cth) and 12 additional pieces of supporting legislation, was passed by the House of Representatives on October 12, 2011 and is likely to pass in the Senate by November. The scheme will operate like an emissions trading scheme with a fixed carbon permit price that transitions into a cap and trade scheme after three years. It consists of two phases—a fixed-price phase commencing July 1, 2012, followed by a floating-price phase commencing automatically on July 1, 2015.

In the fixed-price phase, the carbon price will commence at $23/tCO2-e, indexed annually at a real rate of 2.5 percent per year. In the floating price phase, an annual cap will exist on the number of carbon permits to be issued in each year, and the price of those permits will be determined by the market forces of supply and demand. However, for the first three years of this phase, there will be a carbon permit floor