Posted on behalf of Marian Turner.

The Australian federal government has given carbon a dollar value. From 1 July 2012, the country’s top 500 emitters will pay AU$23 (US$24) per tonne of carbon, with the price to rise annually at 2.5% above inflation.

Australia emits more carbon per capita than any other OECD country. Announcing her government’s scheme on 10 July, Prime Minister Julia Gillard said that it will reduce emissions to 5% below 2000 levels by 2020, amounting to a saving of 159 million tonnes of carbon. If the plan stays on track, the government predicts emissions will fall by 80% before 2050.

Ross Garnaut, economist at Melbourne University and the government’s chief economic advisor on climate change, issued a statement on the blog Crikey that congratulated the Gillard government on a strong package, and particularly lauded its investment in carbon sequestration in rural areas. He said that the scheme would put Australia in a position of international influence in measuring and rewarding sequestration.

Bob Brown, leader of the Australian Green Party, described the carbon package as “world-leading”. The Greens gained the balance of power in the Australian upper house earlier this month, giving them negotiating power with the governing Labor Party. The Greens welcomed a $10 billion investment in renewable energy that is part of the package.

Liberal Party opposition leader Tony Abbott described the government’s carbon package as “socialism masquerading as environmentalism”, and said the scheme has set up the next election to be a referendum on carbon taxing.

Gillard’s government is trying to avoid this by making the package fair to voters. The carbon price came bundled with an overhaul of the income tax system carefully designed to offset effects of the carbon tax on the average Australian. Around 90% of Australian households will receive around $10 a week in additional benefits or tax cuts, almost perfectly balancing the estimated costs that will trickle down from the carbon price.

The Australian academic community responded positively to the scheme, saying it combines a push for change in industry emissions with sensible reforms to the tax system. “The government’s really nailed it”, said Ben McNeil, climate change researcher at the University of New South Wales, in a comment to news website The Conversation.

Image courtesy of Salim Virji via Flickr under Creative Commons.