Carbon floor price rethink a revenue threat

The federal government has been warned there is a risk to its budget revenue estimates if moves to overturn regulations for a carbon scheme floor price prove successful. Without a carbon scheme floor, the price in 2015-16 could plummet to just $5 a permit in line with present world prices. The scheme moves to a floating price in 2015. This could lead to revenue plunging from $8.6 billion in 2014-15 to just $1.7 billion in 2015-16, Frank Jotzo, from the Australian National University’s Centre for Climate Economics and Policy, said. The floor price of $15 a tonne of carbon was negotiated amid fears by the Greens and others that the carbon price could plummet in 2015 when the fixed price period changed to a floating price. But major power companies TRUenergy and International Power have warned that the government’s option for a three-year $15 floor price from 2015 is unworkable and likely to result in higher costs for consumers. The debate came as some in the resources industry raised fears that the budget today will include further cuts to carbon capture and storage programs aimed at finding a way to dispose of carbon from fossil fuels safely in deep geological storage. The Global Institute for Carbon Capture and Storage, set up by Kevin Rudd as prime minister in 2008, could be in the firing line. The institute’s funding was cut in the budget last year when the government also cut $421 million over five years from the Carbon Capture and Storage Flagships program. The Institute for Carbon Capture and Storage was set up to promote international efforts to demonstrate that the technology was viable commercially, but it has come under fire for spending heavily on administration and travel.