The future of the carbon tax

Australia currently has a carbon pricing mechanism which is used to tax the nation's biggest carbon polluters in big business and industry.

The money generated from taxing this carbon pollution goes back into the economy for the purpose of investing in renewable technology and energy efficiency measures.

It's not designed to drive up electricity prices for everyday households or small businesses.

For 2012-13, the carbon price was set at $23 a tonne.

Furthermore, 2013-14 prices were set to $24.15 and for 2014-15 a rate of $25.40.

Moving into July 2015, the carbon price won't be fixed by the government but will evolve to be set by the market.

However, due to the state of lowering carbon prices in Europe, the matter of lowering carbon prices in Australia has been raised.

The Climate Institute of Australia, an independent organisation providing analysis and research on climate change, has said it supports the idea of the short-term lowering of carbon prices, to lower the costs of stronger Australian carbon pollution reductions.

"Reports in the Financial Review that [the] Treasury has, on the basis of lower than expected global prices, revised the expected Australian 2015 carbon price down to $15/tonne means the cost of stronger and fairer emissions reduction has gone down too," said John Connor, chief executive officer  of The Climate Institute.

Both the current federal government and the opposition have pledged to reduce emissions by up to 25 per cent on 2000's levels by 2020.

The Climate Institute asks that whoever is in government in 2014 indicates their final targets for 2020.

The Climate Institute, along with other international experts, recommend that Australia's minimum emission reduction target should be up to 15 per cent by 2020.

"In the absence of a carbon price floor, short-term low carbon prices strengthen the case for policies such as the Renewable Energy Target to help grow a lower carbon Australian economy until global prices better reflect the benefits of reducing emissions in the medium to long-term," said Mr Connor.

The Climate Institute suggests using lower international carbon prices as an opportunity to have stronger targets here in Australia, to help build global ambition in addressing climate change and its harmful impacts.

They put forward that this makes good economic sense as extreme weather events such as recent floods, fires and droughts are already costing Australia money reaching into the billions.

As well as this, these climate change influenced events are reducing the quality of life and wellbeing for Australians.

Posted by Charlie Moore