(EnergyAsia, July 11 2011, Monday) — The Australian government said its new carbon tax to start from next July will reduce carbon pollution by 159 million tonnes a year through 2020, the equivalent of taking over 45 million cars off the road.

The tax will be imposed on 500 of the country’s biggest polluters under the carbon pricing mechanism, and will largely spare households who will be given tax cuts and increases in pensions, allowances and benefits to offset the increased living cost.

Risking the wrath of the powerful mining and energy industries, Prime Minister Julia Gillard, Deputy Prime Minister and Treasurer Wayne Swan, and Minister for Climate Change and Energy Efficiency Greg Combet yesterday announced their government’s comprehensive plan for tackling climate change, ‘Securing a clean energy future’.

Citing the need for a clean energy future to reshape the economy, cut carbon pollution, drive innovation, and help avoid the increased costs of delaying action on climate change, the plan includes putting a price on carbon pollution, promoting innovation and investment in renewable energy, improving energy efficiency, and creating opportunities in the land sector to cut pollution.

The government said: “The carbon price will change Australia’s electricity generation by encouraging investment in renewable energy like wind and solar power, and the use of cleaner fuels like natural gas.

“Households will be looked after with tax cuts, higher family payments and increases in pensions and benefits, to help meet the costs passed through by some businesses. The household assistance estimator provides further information about what sort of assistance you might be eligible for.

“Individuals, businesses, industry and governments around the world are already taking action to reduce carbon pollution. By acting now, Australia can look forward to long term prosperity for ourselves and future generations.”

Stating that it could no longer afford to ignore the negative impact of global warming, the government said it will seek to negotiate the closure of around 2,000 megawatts of highly polluting electricity generation capacity by 2020, while at the same time safeguarding the nation’s energy security.

It promised a dramatic expansion in renewable energy programmes including through a new commercially oriented Clean Energy Finance Corporation that will invest A$10 billion in renewable energy, low pollution and energy efficiency technologies. (US$1=A$0.94).

Around $1 billion will be spent over the next four years to help farmers and land managers pursue climate change action on the land and promote biodiversity. The government added that improvements in energy efficiency will help households save money on their bills and contribute to efforts to cut pollution.