Carbon Pricing Mechanism

Source: IEA/IRENA Renewables Policies Database
Last updated: 20 November 2014

The previous Australian government introduced a price on carbon, which took effect on 1 July 2012. The carbon pricing mechanism was fixed at a price of AUD23 a tonne in 2012-13, and was then set to transition to a flexible market price under a ‘cap and trade’ scheme in 2015-16.

In both the fixed and the flexible price periods, liable entities had to pay a price for every tonne of carbon (or the equivalent amount of certain other greenhouse gases) that was emitted. Liable entities were to be required to report on their emissions, and can meet their obligations by either surrendering the appropriate number of allocated units, or paying a unit shortfall charge. A price on carbon pollution was expected to create incentives for Australia’s biggest polluters to reduce their emissions and invest in clean energy.

Australia has also committed to reducing its emissions by between 5 and 15 - 25 per cent below 2000 levels by 2020. The five per cent target is unconditional. The upper limit targets of 15 per cent or 25 per cent were conditional on the extent of international action. On 27 January 2010, Australia formally submitted its full target range to the Copenhagen Accord. The decision to maintain the full range was consistent with the approach taken by other countries. The government also committed to a long-term target to cut pollution by 80 per cent below 2000 levels by 2050.

The Clean Energy Act 2011 has now been repealed. This abolished the Carbon Pricing Mechanism with effect 1 July 2014. 

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