Govt To Review Carbon Tax Modelling After EU CO2 Price Cras

AAP 17/04/13 The federal government is expected to review modelling for its carbon tax in the lead-up to the budget, after a vote in the European Union sent the price of CO2 emissions tumbling. A proposal by the European Commission to reform the EU emissions trading scheme (ETS) to have polluters pay more was voted down by EU lawmakers overnight. The controversial plan aimed at freezing – or “backloading” – 900 million carbon permits between now and 2015, to address oversupply and drive up their value. Analysts expected the plan would double the price per tonne of CO2, but the price plunged after the vote was defeated narrowly by 19 votes, with 63 abstentions. As news of the rejection spread, European carbon prices slumped to €2.63 before recovering some lost ground to trade just below €3 ($A3.84). The decision has implications for Australia’s carbon price mechanism, which will link with Europe’s ETS from July 2015. Australia’s carbon price is currently a fixed $23 per tonne and will rise incrementally over the next two years before linking with the European scheme. Treasurer Wayne Swan said the government would re-examine its carbon price before the May budget. “We’ll look at all of our assumptions and forecasts in the budget, and we’ll do that in the normal way,” he told reporters. Climate Change Minister Greg Combet said Treasury would model the carbon price in “the usual way” in coming weeks and provide revised forecasts for 2015/16 and a revised revenue forecast. Treasury modelling had projected the price at $29 per tonne in 2015/16. Mr Combet said the government would continue with its plans to link with the European emissions trading scheme from 2015, when Australia would have a common carbon price with 31 other countries. “Obviously, the price in the European market has an influence on the Australian price at that time, but that is two years away and a lot of things can happen between now and then,” he told AAP. The EU decision was another example of the global financial crisis having an impact on the Australian budget, he said.