Lessons for Canada: Implementation of Australia’s Carbon Pricing Mechanism

The document examines Australia's carbon pricing scheme, which began on July 1, 2012, targeting the largest emitters to achieve a 5 per cent emissions reduction below 2000 levels by 2020. It details the transition from a fixed-price period to a flexible cap-and-trade system, the role of the Clean Energy Regulator, and extensive compensation packages for trade-exposed industries and households. The brief highlights the importance of the National Greenhouse and Energy Reporting Scheme (NGERS) as a foundation for implementation and warns against locking in fixed prices during volatile international market conditions.

• Australia's Clean Energy Future package implements a carbon pricing scheme starting July 1, 2012, aiming for an unconditional emissions reduction target of 5 per cent below 2000 levels by 2020, which equals 160 million tonnes of abatement.
• The scheme targets up to 500 of the largest emitters (liable entities) with annual emissions exceeding 25,000 tonnes of CO2e. It begins with a three-year fixed price period (2012–2015) starting at $23 per tonne, before transitioning to a flexible-price cap-and-trade system from July 1, 2015.
• To mitigate economic impacts, the government established the Jobs and Competitiveness Program for trade-exposed industries, providing free units at rates of 94.5 per cent for highly emission-intensive activities and 66 per cent for moderately intensive activities, estimated at $8.6 billion over three years.
• Household assistance includes lump sum advances and permanent increases in social security payments, alongside a tripling of the general income-tax-free threshold to $18,200 per annum for taxpayers earning under $80,000.
• The implementation of the carbon price was made possible by the pre-existing National Greenhouse and Energy Reporting Scheme (NGERS) introduced in 2007, which provided the necessary emissions profile data for liable entities.
• The Australian government abolished the planned $15 floor price for the flexible price phase after the collapse of the EU ETS price and the strengthening of the Australian dollar created a significant discrepancy between domestic and international prices.
• The federal carbon pricing mechanism led to the closure of subnational schemes, such as New South Wales' Greenhouse Gas Abatement Scheme (GGAS) on July 1, 2012, to avoid duplication.

APA

Beck, T. (2012). Lessons for Canada: Implementation of Australia’s Carbon Pricing Mechanism. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/lessons_for_canada_australia_carbon.pdf

Chicago

Beck, Tony. Lessons for Canada: Implementation of Australia’s Carbon Pricing Mechanism. International Institute for Sustainable Development, 2012. https://www.iisd.org/system/files/publications/lessons_for_canada_australia_carbon.pdf.

Wikipedia

{{cite report |last1=Beck |first1=Tony |title=Lessons for Canada: Implementation of Australia’s Carbon Pricing Mechanism |publisher=International Institute for Sustainable Development |date=October 2012 |url=https://www.iisd.org/system/files/publications/lessons_for_canada_australia_carbon.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{beck2012lessons, author = {Beck, Tony}, title = {{Lessons for Canada: Implementation of Australia’s Carbon Pricing Mechanism}}, institution = {International Institute for Sustainable Development}, year = {2012}, month = oct, url = {https://www.iisd.org/system/files/publications/lessons_for_canada_australia_carbon.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }