Moderation in Usage: Years in Retrospect

Photo Courtesy of: Blind Wiehle (flickr.com)

It’s been several years since the Carbon Tax was implemented, and the long-term benefits of the restriction are definitely being felt down the road. It’s still a long-way from the goal of reduced emissions in twenty-five years’ time, though. How’s the rollout going so far? Here’s a lookback and forecast of what to expect.

Curbing Consumption: Taxation

In essence, a carbon tax levies manufacturing and mining firms for every tonne of hazardous gases their factories and equipment release into the air. In Australia, the government charges $23 Australian bucks or around fifteen pounds per tonne, and this rises by 2.5% in yearly payments. Because of this additional expense, the legislators expect that the top firms will eventually curb their use of fossil fuel to run their power generators and vehicles. Thus, the amount of carbon emission will hopefully drop to 5% all over the country in eight to ten years under this policy.

Demand, Upgrades Dictate Cost

Naturally, the power rates would increase because of changes in the way the firms run their business. Old equipment must be replaced with newer and more energy-efficient ones. Suppliers of electricity must stop using coal or oil to fire up the turbines and shift to a cleaner energy source, such as water, wind or sunlight. And so, energy companies that invest in cutting-edge technology, like hydroelectric power generators, modern wind turbines, and large solar panels, will survive through the transition.

Forward-Facing and Optimistic

On the whole, the carbon tax aimed (and still aims) to clear up Australia's air quality at the expense of the energy and mining companies that lack economic resources to improve their facilities. This concern is evident in the 2012 Australia and New Zealand report from the Carbon Disclosure Project, which revealed that seventy-five percent of the energy firms affected by the legislation viewed the required changes to their business operations as risky investments. In particular, three big corporations in the energy and mining industry have shared strong warnings that the carbon levy presented high risks for all sectors. This means increased consumer prices for gas and electricity and more expensive wholesale rates for energy bundles.

On the flip side, the rise in power costs eventually drives investment into "green" energy generation. businesses will seek cost-efficient means to get the resources they need by developing newer technologies. This led legislators to believe that electricity retailer and producers, as well as major players in the energy, mining and manufacturing industries will thrive despite the initial drawbacks of this tax policy. In fact, the 2012 Australian Energy Technology Assessment from the Bureau of Resources and Energy Economics predicted that electricity generated through wind turbines may turn out to be cheaper than coal within ten years or so under the carbon policy.

Related Resources:

The End of the Electric Utilities? The Industry Thinks So Too (huffingtonpost.com)

Power and Water Utilities: An Unlikely Alliance (huffingtonpost.com)