Oct. 28 (Bloomberg) -- General Electric Co. says Australia will eventually adopt an emissions-trading system even as the government seeks to repeal a carbon-price mechanism imposed on the A$1.5 trillion economy by a previous administration.
“We still believe that over time there needs to be a price on carbon, there will be a price on carbon,” GE Vice Chairman John Rice said in an Australian Broadcasting Corp. interview shown yesterday.
Prime Minister Tony Abbott, elected Sept. 7, has vowed to abolish the mechanism established by Labor’s Julia Gillard in 2011 as a step toward a carbon market, saying it has driven up energy prices and deterred investment. More than 300 of Australia’s largest emitters must pay an average $24.15 a metric ton for greenhouse gases this year, the highest price in the world.
While Abbott’s Liberal-National coalition has a majority in parliament’s lower house, it doesn’t control the Senate, which has the power to block a repeal. The prime minister told a meeting of party members in Hobart Oct. 26 that new Labor leader Bill Shorten should support his bid to remove the carbon tax, calling it “socialism masquerading as environmentalism.”
Gillard in 2011 agreed to create a carbon tax at a fixed rate for three years, starting in July 2012 at A$23 a ton, before market-based pricing commencing in mid-2015. After winning back the Labor party leadership by defeating Gillard in a June party-room vote, Kevin Rudd announced that a floating price linked to the European Union’s mechanism would be implemented a year earlier, in July 2014, at about A$6 a ton.
Repeal would cut costs for business and manufacturers and save the average household A$521 in fiscal 2014-15, Environment Minister Greg Hunt said Oct. 16. GE’s Rice said overseas investors are seeking clarity, regardless of the outcome of Abbott’s effort to drop the tax.
“Whatever the outcome is, repealing the legislation, replacing it with something else or not, investors are going to want to see that clarity,” he said. “Otherwise you’re just not going to get the right investments here.”
Slowing global economic conditions had reduced the impetus for more nations to adopt emissions-trading systems, Rice said. The European Union, South Korea and New Zealand, along with regions and states in China, the U.S. and Canada, have implemented carbon-price mechanisms or plan to.
“With economies under stress, it’s hard to pay the price,” Rice said. “As the global economy begins to improve, you probably will see more people go back to a level of interest in a price-per-carbon and other incentives to promote the development of renewable technologies.”
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