Carbon price to halve by 2015 as revenue cut by billions
The Gillard Government reaffirmed its commitment to putting a price on carbon as the best way to tackle climate change, but acknowledges the carbon price will likely halve in the next two years.
As a result, funding for the national low-emissions coal initiative and the Carbon Capture and Storage Flagships program have both been cut and the government is expecting carbon price revenue to fall by $6 billion over the next four years.
The Clean Technology Programs, the Biodiversity Fund and the Australian Renewable Energy Agency will all have funding deferrals and changes. While the program is still promising more than $1 billion over the next eight years, it will now be directed at things like the Tasmanian Forests Agreement.
From July this year, the government will be able to count abatement from cropland management, grazing land management and revegetation as part of Australia's commitments under the Kyoto Protocol. This will mean funding put aside for the non-Kyoto carbon fund will no longer be needed, saving a projected $235 million.
Budget forecasts took into account the economic slump in Europe, but leaned on longer term modelling to predict the carbon price would bounce back by 2018-19 to above the current floor price of $25.40.
In his speech, Treasurer Wayne Swan contended no country could be a first-world contender if it wasn't also committed to a clean energy future.
He held the government line that the best way to do that is by putting a price on carbon pollution, despite the Budget recognising the carbon price would 'likely be lower' than expected.
As part of the move to adjust to a carbon price that was originally forecast to be $29 in 2015-16, the government had originally promised a second round of tax cuts. Those cuts will now be deferred until 2018-19 when the price is forecast to go over $25.
There was no new money for the Carbon Farming Initiative.