Voluntary carbon offsetting and the Australian Governments Clean Energy Future

The political debate over climate change has confused many consumers with respect to voluntary carbon offsetting and how it ‘fits’ with the Australian Government’s scheme.

The Australian Government’s Clean Energy Future legislative package has now passed and a carbon price for Australia’s (roughly) 500 largest polluters will take effect from July 2012.

There are two stages to implementation:

·      1. fixed price period: The carbon pricing mechanism will commence on 1 July 2012, with a price that will be fixed for the first three years. The price will start at $23 per tonne and will rise at 2.5 per cent each year in real terms.

·      2. emissions trading scheme: From 1 July 2015, the carbon price will transition to a fully flexible price under an emissions trading scheme, with the price determined by the market.

The Australian carbon market can now be broadly defined under two quite distinct markets:

•  mandatory: (those with an obligation to cancel permits for every ton of CO2 emissions under the Clean Energy Future Program); and
• voluntary: (those with no obligation who measure, reduce and offset emissions using carbon offsets, to become carbon neutral).

The carbon price is effectively a tax on pollution and will only be paid by Australia’s largest polluters.  It encourages big, heavy polluting businesses to reduce their emissions to improve profitability and competitiveness and to move to clean energy technologies. For most people, the Government’s comprehensive Household Assistance Package will cover, and in many cases exceed, any price rises caused by the Clean Energy Future Program. Nine out of 10 households will receive compensation from a combination of tax cuts and increases to family benefits.

The carbon price aims to reduce Australia’s emissions by 5% from its 2000 levels by 2020.  While a welcome development, this reduction target is well below what climate scientists consider is necessary to make a significant impact on climate change.  Leading climate scientists consider a reduction target for Australia of at least 10-15% from our 2000 levels by 2020 is required – double or triple what is currently in place.

As a result, Climate Positive continues to encourage Australians to take responsibility for their own emissions by voluntarily measuring, reducing and offsetting their individual, household and business carbon footprint.

Previously, voluntary actions were rolled up into Australia’s total carbon pollution reduction measurement, which effectively reduced the burden placed on big business.  Under the new Clean Energy Future program, the government has pledged to make sure individual voluntary actions are managed so they produce more abatement than is required under the carbon price – these voluntary contributions will be additional to the Government’s target. 

This is a better result for the environment, as it will lift Australia’s total contribution above the 5% target to be achieved through taxing the 500 largest polluters.