Carbon Regulation: Time for America to Learn from Australia’s Mistake

Christina Baworowsky /

Album / Raga / Prisma/Newscom

Album / Raga / Prisma/Newscom

Australia’s new Prime Minister Tony Abbott, who won a landslide victory earlier this month, vowed to promptly scrap the nation’s tax on carbon emissions. He began to follow through at his first cabinet meeting. Also in line to be repealed are several commissions organized by the previous government to provide carbon pricing and emissions analysis and administer billions of dollars in subsidies to renewable energy companies.

After its implementation, the tax became overwhelmingly unpopular. The tax on big emitters, such as factories and power plants, started at AU$23 per metric ton of carbon dioxide produced and was increased to AU$24.15 per metric ton in July 2013, as required by the law. The trouble is that this tax had a large ripple effect on more than just big businesses.

The Institute for Energy Research’s recent report Australia’s Carbon Tax: An Economic Evaluation shows the practical economic shortcomings of the Australian carbon tax:

While Australian voters have come to the conclusion that the carbon tax has got to go, American politicians continue to offer it as a viable solution to global warming and the national debt. In fact, climate data does not demonstrate that global warming is a problem or explain how sensitive the climate is to carbon dioxide emissions. The national debt is the result of a spending problem, not a revenue problem. Heritage analysis of one such plan anticipates that a carbon tax in America, as in Australia, would damage the economy and have little to no environmental impact:

Though it seems promising that Australians will cut their losses by ending the tax, there is no way to undo all the damage that was done to Australian businesses and individuals. American politicians should take this as an opportunity to avoid such a loss altogether and prevent President Obama from working around Congress to implement his own climate agenda.

Christina Baworowsky is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please click here.