Australia's carbon tax scheme is put on the limelight again after China announced last week the adoption of a carbon tax scheme effective 2015. China aims to reduce its carbon emissions by as much as 40 per cent to 45 per cent by 2020.

Australia's $23 a tonne of carbon dioxide tax price is pit against China's $1.55 a tonne. Although China said the increase will grow gradually depending on the type of emissions, the proposed initial amount pales in comparison to Australia's, reigniting unrest yet again among Australian businesses.

Ever since talks and debates started on the carbon tax scheme, Australian businesses had been adamant the $23 a tonne is a steep price to pay. Australian mining groups, the ones most affected by the carbon tax scheme, had vehemently argued much more is at stake than just being able to comply its yearly tax declaration responsibilities. Mounting the carbon tax, they said, will close coal mines, risk thousands of jobs, push power bills to soar and harm Australia's international competitiveness.

Nikki Williams, chief executive of the Australian Coal Association, however, said China's carbon tax plan, also the world's largest carbon polluting economy, is not primarily geared to move the country away from its use of fossil fuels or coal. Unlike with Australia which put a high cap on its carbon emitters to fast track the reduction and elimination of carbon pollutants that it contributes.

"There is no comparison" by basis of environmental cleaning and commitment, Williams told The Australian.

"China knows how important coal is to its future growth prospects," she added, noting total elimination of fossil fuel or coal use could jeopardize its economic growth.

Yet, the fact remains that Australia's carbon tax is the most expensive in the world. Although the federal government had promised to provide assistance to emissions-intensive industries, Australia it seems jumped too far enough ahead of the global pack, placing its economy, that is mainly reliant on mining for growth and expansion, at risk with a scheme that imposes a heavy burden on some of its biggest industries. Even the U.S. the world's largest economy and second biggest global carbon dioxide producer, has no national carbon tax policy.

For one, Australia's carbon tax price is far higher than prices imposed in Europe and New Zealand. Against India, another major polluting economy, Australia's carbon tax is 23 times bigger versus India's $1.07 a tonne. India wants its carbon emissions reduced by 20 per cent to 25 per cent by 2020 from 2005 levels.

At the rate, Australia could eventually lose the race.

"Our concern continues to be that Australian industries will be significantly disadvantaged by a domestic scheme that is the broadest and most expensive in the world: $23 per tonne versus $1.55 per tonne and a cost to our coal industry of $18 billion to 2020," Williams said.

Under China's carbon tax plan, pollutants such as sulphur dioxide, COD (chemical oxygen demand) and nitrogen oxide are the ones first to be taxed. Other emissions would be included later on.

China's proposals for a new environmental taxation system had already been submitted for review to its Ministry of Finance, of which target implementation is eyed before the end of the 2011-15 five-year plan.

Australia's carbon tax will be imposed on 500 of its biggest polluters from July 2012, before going to a carbon trade scheme in 2015.

Australia accounts for only around 1.5 per cent of global carbon releases, but is the world's biggest per capita polluter as 80 per cent of its electricity generation relies on coal.

RELATED STORIES