In a bold move to address climate change and revitalize the Australian economy, two esteemed economists, Ross Garnaut and Rod Sims, propose a tax on fossil fuel production. This “carbon solution levy,” they argue, could generate $100bn in its first year if implemented in 2030-31 at a rate of $90/tonne of carbon dioxide equivalent, mirroring Europe’s five-year average price.
Garnaut, a prominent figure from the Hawke government era, and Sims, former head of the competition watchdog, suggest that the revenue from this tax could significantly subsidize the transition towards carbon-free energy production. This shift would not only lower living costs and aid global emission reduction efforts but also leverage Australia’s vast renewable resources to rejuvenate its flagging economy.
“The global transition to net zero is Australia’s opportunity,” Garnaut plans to assert in an upcoming National Press Club speech. He believes that Australia can break free from a decade of economic stagnation by embracing the net-zero transition, enhancing productivity and living standards.
Despite the political challenges and the shadow of past “climate wars,” Garnaut and Sims are optimistic. They advocate for a reevaluation of policies, like the reintroduced carbon pricing, to overcome the hurdles posed by political reluctance and industry pushback.
Sims emphasizes the necessity of pricing the environmental damage caused by fossil fuels to level the playing field for green products. Meanwhile, Garnaut envisions bipartisan support for energy and climate policies at the state level as a solid base for national action.
Their proposal extends beyond taxation; they recommend the federal government revise its investment scheme for new solar and wind farms to avoid budget strains and the pitfalls of central planning. By underwriting a significant portion of project costs and sharing in the profits, the government could encourage private investment in renewable energy.
This visionary approach aims not only to safeguard Australia’s prosperity but also to contribute significantly to global efforts in combating climate change by positioning Australia as a leading producer of zero-carbon energy and products.
