This Sunday Australia’s controversial carbon tax will come into effect. Around 300 businesses will be charged $23AUD for each ton of carbon they emit until 2015, when the country’s carbon market will start. The carbon tax and subsequent trading scheme is part of the Labor government plan to cut carbon emissions by five percent by 2020 and 80 percent by 2050, based on 2000 levels.

pic: Commonwealth Secretariat (Flickr CC)

From the Guardian:

For prime minister, Julia Gillard, the carbon tax is the centrepiece of the country’s “clean energy future”. It’s also the issue that will, in all likelihood, define her premiership and has been largely responsible for pushing her disapproval rating among voters to 60%.

Conservatives and climate skeptics (who are often one and the same) obviously hate the plan, claiming it will damage Australia’s economy and increase the cost of living. The Greens on the other hand, claim the tax will stimulate the economy and create green jobs.

The government has responded to concerns by instituting compensation schemes such as tax cuts and welfare and pension increases. Nonetheless, public opinion seems to be against the carbon tax, with a June poll putting 59% against with only 37% for.

Though Gillard was initially against a carbon tax, she adopted the policy in order to form a minority government along with the Greens.

The world’s largest exporter of black coal for electricity generation and iron ore, Australia has the highest per capita CO2 emissions in the developed world. The idea for the carbon tax is that it will encourage businesses and industry to develop and implement low carbon technology and practices.

Pic: eyeweed (Flickr CC)

As for rises in the cost of living, they just may be a bit exaggerated, at least in terms of large businesses.

From an ABC report:

The Housing Industry Association says that modelling is forecasting a 0.8 – 1.7% increase to the cost of house construction. Power providers have estimated the cost of electricity to increase by 7% due to the Carbon Tax. But the big supermarkets are saying that there won’t be any short term impact on food prices as they’ve been preparing for increased power costs for many years.

The regional government of Western Australia’s predictions are grim in terms of utility prices, with power costs set to go up by 9%, gas costs by 4.2% and water by 0.8%.

From AAP:

This would be on top of a 3.5 per cent rise in power costs and six per cent rise in water, sewerage and drainage in the 2012-13 budget.

Australia’s carbon tax is an experiment, with many politicians unwilling to endorse it, probably for fear of accepting responsibility should it prove to remain unpopular.