Carbon by itself is not a greenhouse gas. However, too many carbon molecules in the air threaten the supply of oxygen we currently have. Only one molecule of carbon is needed to create carbon dioxide, which requires bonding with two molecules of oxygen. With so many carbons seeking two of the element we badly needed to live, what happens to our oxygen supply? The answer to this question is one of the reasons behind the need to reduce emissions in the atmosphere via a carbon tax policy.
Curbing One’s Enthusiasm for Fossil Fuel
In essence, a carbon tax levies manufacturing and mining firms for every tonne of hazardous gases their factories and equipment release into the air. In Australia, the government charges $23 Australian bucks or around fifteen pounds per tonne, and this rises by 2.5% in yearly payments. Because of this additional expense, the legislators expect that the top firms will eventually curb their use of fossil fuel to run their power generators and vehicles. Thus, the amount of carbon emission will hopefully drop to 5% all over the country after eight to ten years under this new policy.
A Surge in Electric Generation Costs Leads to Expensive Rates
Naturally, the power rates would increase because of changes in the way the firms run their business. Old equipment must be replaced with newer and more energy-efficient ones. Suppliers of electricity must stop using coal or oil to fire up the turbines and shift to a cleaner energy source, such as water, wind or sunlight. And so, energy companies that invest in cutting-edge technology, like hydroelectric power generators, modern wind turbines, and large solar panels, will survive through the transition.
The Optimism of Government Agencies and Environmental Groups
On the whole, the carbon tax aims to clear up Australia’s air quality at the expense of the energy and mining companies that lack economic resources to improve their facilities. This concern is evident in the 2012 Australia and New Zealand report from the Carbon Disclosure Project, which revealed that seventy-five percent of the energy firms affected by the legislation viewed the required changes to their business operations as risky investments. In particular, three big corporations in the energy and mining industry have shared strong warnings that the carbon levy could present high risks for everyone. This means increased consumer prices for gas and electricity and more expensive wholesale rates for energy bundles.
Nevertheless, the government thinks the rise in power costs eventually drives investment into “green” energy generation. The businesses will seek cost-efficient means to get the resources they need by developing newer technologies. This led legislators to believe that major players in the energy, mining and manufacturing industries will thrive despite the initial drawbacks of this tax policy. In fact, the 2012 Australian Energy Technology Assessment from the Bureau of Resources and Energy Economics predicted that electricity generated through wind turbines may turn out to be cheaper than coal within ten years or so under the carbon policy.