When the multi-party climate committee of Labor, the Greens and independent MPs agreed on a starting price of $23 per tonne of carbon dioxide (10 July 2011), this figure was in-part based on the European price at the time of around $20 per tonne.
Since the decision, the European price of carbon dioxide has fallen to under $10 per tonne. While it may seem obvious that the Australian price will also fall, analysts and economists interviewed by The Age cautioned against this assumption and said that before any comparisons were made, we need to consider what the scheme is designed to achieve.
A recent analysis by Bloomberg New Energy Finance forecast that the Australian price would fall to $15 in 2015 and $4 in 2020 once the floor price is removed. David Pearce, Executive Director of the Centre for International Economics in Canberra also expects this price to fall to $15 in 2015.
Should the Australian carbon price be reviewed before implementation?