Making sense of the carbon tax

On Sunday, 10 July Prime Minister, Julia Gillard officially announced the Australian Government will be implementing it’s long-anticipated Carbon Tax starting from 1 July 2012.

For months now, the new carbon tax has seemed to be the ‘hot topic’ of conversation, with everyone having their own ideas as to what it is and how it will affect them.

Effectively, the carbon tax or carbon pricing is the ‘starting point’ in tackling climate change by placing a cost on greenhouse gas emissions. The carbon tax will then be phased into a full emissions trading scheme to be introduced on 1 July 2013.

According to the Australian Government’s Clean Energy Future website, the emissions trading scheme aims to control the amount of carbon pollution emitted. The government plans to set a ‘limit’ on the amount of greenhouse emissions that can be emitted and will be initially charging Australia’s 500 largest carbon emission polluters, each responsible for 25,000 tonnes or more of emissions annually, $23 per tonne which will increase at a 2.5 per cent inflation rate for the first three years of the scheme.

These companies will be given, or sold, permits that will allow them to emit a certain amount of emissions. Companies that emit more than their ‘share’ of pollution will be required to buy or ‘trade’ permits from companies that require fewer permits.  The whole idea is that this will provide an incentive for companies that emit high levels of pollution to reduce it.

The Australian Government says the money raised from the carbon tax will be used to assist families with household bills, help businesses to transition to the emissions trading scheme and any extra will tackle climate change. However, the amount of compensation each household will receive is still unknown.

In effect, the carbon tax will have major benefits for the solar industry and also households using solar. Currently, the Carbon Pricing scheme is expected to increase the cost of living for an average household by $10 a week, with $3.30 added to the average household electricity bill. Already this year, the cost of electricity has averaged an 11% increase across the nation and is set to continue rising drastically over the next 3 years.

Solar power is one of the best investments a consumer can make to protect themselves against the inevitable increase in cost of living.

The Queensland feed in tariff enables households to earn a minimum of $0.44 per kWh, which is more than double the price paid for power consumed from your electricity supplier. It is this feed in tariff that increases the feasibility of a solar investment and shortens the payback time, which for many customers can be between 4 to 6 years (depending on their system size and energy consumption during the day).

With electricity prices set to keep rising and solar technology becomes more and more affordable and widespread, it has never made more financial sense for individuals to install solar systems.