Australia's Emission Tax Is a Good Reference for Hong Kong

Australia's emission tax is a good reference for Hong Kong The Australian parliament passed the carbon emission tax that would be put into force for three years as a transition period towards the future establishment of the carbon emission permit trade mechanism. Hong Kong's China Light and Power (CLP), which has a power plant in Australia, immediately issued a profit warning. In strong contrast, Hong Kong's emission reduction measures, however, bring power companies even bigger opportunities for profits. Australia's ruling Labour Party could not win an overwhelming majority at the election last August and had to struggle for support from the Green Party. The carbon emission tax finally broke through layer after layer of political resistance and will be implemented in July next year. The target is to have carbon emission in 2020 lowered to five per cent below that of the 2000 level. Australia has always given people an image of attaching importance to environmental protection. Many Hong Kong people feel that the air is fresh when they are in Australia. Actually, in terms of the average carbon emission per person, Australia is second to none in the developed nations. The biggest reason is that 80 per cent of its electric power comes from burning coal. The new tax is targeted at 500 companies with the greatest carbon emission at AU$25 (about HK$200) per tonne of carbon emission. The effect was immediately seen on CLP's profits in the country. A securities dealer estimated that CLP's Yallourn Power Station in Australia would need to make a provision of $6 billion in the second half of this year. Australia launched the carbon emission tax which undermined the international competitiveness of businesses. It would also stimulate inflation as electricity tariffs were raised. The local estimation was a rise in inflation of 0.7 percentage points. To reassure the business sector and the citizens and break the resistance, the authority promised to allocate 40 per cent of the... [continues]

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