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By Nick Perry From:AAP April 18, 2013 A GROWING chorus of business and industry groups is calling for Australia’s carbon tax to be scrapped now and replaced with an emissions trading scheme (ETS) and a floating price. Opposition to the fixed-price regime – currently $23 per tonne of CO2 emissions – has grown since a failed bid to improve Europe’s ETS saw market-based prices there plummet to below $4 per tonne. Market analysis released on Thursday forecasts Australia’s carbon price could plunge to $2.70 when Labor’s carbon pricing mechanism links with Europe’s ETS in July 2015. The fixed price is due to rise to $24.15 in July this year and $25.40 in 2014, before the price is set by the market in 2015. Industry is calling for an earlier transition to a floating price, arguing it would help drive down power costs for businesses and households. Wesfarmers chief Richard Goyder said companies didn’t want to pay significantly more for emissions than the rest of the world. “I think business would welcome a more market-based price, considering the cost pressures we’ve got at the moment,” he said on Thursday. The Australian Industry Group said by abolishing the fixed-price period and linking with Europe, Australia’s emissions targets would still be met but at a lower cost to business. “We should make the most of the opportunity to meet our own targets at least cost,” said AiGroup chief executive Innes Willox. In its latest forecast, energy and carbon advisory firm RepuTex predicted Australia’s carbon price would average just $2.70 when it’s floated until 2020. Treasury anticipated a carbon price of $29 in 2015/16, but since Europe’s price spiral Labor has confirmed the forecast would be revised in the May budget and an updated revenue outlook provided. RepuTex executive director Hugh Grossman said the price plunge would see companies meet their emissions targets at a much lower cost and spur a revival in coal-fired power generation. The total impact would be an immediate reduction in wholesale electricity prices. “They’ll basically drop to levels pretty close to what we would have seen before the introduction of the carbon pricing mechanism,” Mr Grossman told AAP. Meanwhile, opposition climate action spokesman Greg Hunt says the coalition agrees using markets was the best way to tackle global warming – but not with a carbon tax. Using a “classic market mechanism”, Mr Hunt said the coalition would directly fund activities that reduced CO2 emissions – known as abatement – like revegetation and improving soil carbon. Abatement would then be purchased at the lowest possible cost via a reverse auction, a process where prices are driven down by competing sellers. In a speech to the Australian National University on Thursday evening, Mr Hunt will argue this carbon buyback approach would reward innovation and initiative while meeting Australia’s climate targets. “Whereas the carbon tax tries to drive up the price of basic services in order to force down use … we will not provide a dollar unless there is an actual reduction of emissions,” he will say. “Our Direct Action Plan is a simple, low-touch market mechanism.” Continue reading →