(EnergyAsia, July 12 2011, Tuesday) — The Australian government said its “Strong Growth, Low Pollution” research has found that the economy will continue to grow strongly at the same time as it reduces carbon pollution by targeting the country’s worst polluters.

The report modelled the impact on the economy by putting a price on carbon pollution, said a joint statement issued by the offices of the Prime Minister, Deputy Prime Minister and Treasurer, Minister for Climate Change and Energy Efficiency.

With carbon priced at A$23 a tonne and forecast to rise by 16% by 2020, the report said the average income will rise by around A$9,000 in today’s dollars. (US$1=A$0.94).

The national employment is projected to increase by 1.6 million jobs by the end of the decade while the impact on the cost of living will be modest. The price of most goods will increase by less than one half of one per cent as the result of a carbon price. That is less than half a cent in every dollar, said the report.

Prime Minister Julia Gillard, whose popularity has been declining over the carbon issue, said delaying action on climate change will only lead to higher costs, undermine Australia’s competitiveness and will reduce jobs and living standards.

Putting a price on carbon will drive innovation and investment in clean energy technology, moving production towards less pollution-intensive processes.

The report has projected that without action, Australia’s pollution is forecast to nearly double by 2050. A carbon price will deliver an absolute reduction in emissions and drive the expansion of the renewable energy sector so that it is 18 times larger than its current size.

The government said: “This extensive modelling has been prepared by the Treasury in consultation with other departments over recent months, and will be updated to reflect the specific finalised policy agreed by the Multi-Party Climate Change Committee (MPCCC) ahead of legislation being introduced into the Parliament. Any updated modelling is expected to closely match the results of the core policy scenario modelled in the Strong Growth, Low Pollution report.

“Differences between the MPCCC agreement and the scenarios modelled include the starting price, availability of international permits, the binding 100% facility allocation cap and the treatment of fuel.

The scheme’s main features call for:

– Reducing Australia’s carbon emissions by 159 million tonnes in 2020 through a carbon tax from mid-2012 to mid-2015 that will be replaced by a carbon-trading system.
– A new carbon tax to be set at A$23 a tonne in July 2012, A$24.15 in July 2013 and A$25.40 in 2014. There will be no import of international carbon credits during these three years.
– The start of carbon trading from July 2015, subject to certain conditions and price ceilings and support.