The main purpose of this report is to discuss the effect of Australia’s “Carbon Tax” on firms located in Australia. In the various kinds of business, these energy-intensive firms are the object to be discussed. The way of the effect on these companies, comprising their strategies and domestic and international competitiveness will be illustrated.
As we all know the rising emissions of greenhouse gases, mainly carbon dioxide, lead to climate change and consequently threatening the global economics and human life. The impacts of climate change include increases in heat waves, droughts, and heavy precipitation, resulting in a decline in agricultural yields and consequently threating food security, and sea-level rise, leading to loss of habitat and precious fresh water (Rachel, 2011). It is the time that we find ways to tackle with it, to reduce the emissions of carbon dioxide, and to save ourselves. Nowadays, countries and regions, such as the United States, the EU and Canadian, have implemented carbon policies. Australia, as the major exporter of coal, iron ore and aluminium, is responsible for the current global carbon emissions. And it has implemented “Carbon Tax” in 2011, with the hope to move Australia from a high carbon consumption, inefficient economy to a more efficient, lower carbon burning economy (Tony, 2011).Putting a price on carbon emissions will not only affect the carbon-intensive industry, but ordinary consumers. In this report, we focus on the effluence, the carbon charge takes, on firms located in Australia. And in the main section, the question about how the “Carbon Tax” affects the strategies and competiveness of firms will be further reveled.
As mentioned before, a variety of policy should be taken to avoid damage from climate change, take global economy away from fossil fuels, and promote efficient and clean energy.The climate policies compromise carbon tax, cap-and trade program and other complementary policies such as efficiency standards, incentives for preserving and enhancing renewable forms of energy. From now, the carbon tax, apparently, is comparatively a more direct, simple and most employed policy.
Although Australia is not the only country who price carbon emissions, there are still many countries and regions, focusing on economic interests,are reluctant to take action. However, it is not easy for any government in choosing what they can get in a short-term profits and what they should do for a long-term interests, especially in the complex domestic and international economic environment. There is no doubt, Australia as one of the few countries implementing climate policies, is now facing more opportunities and challenges.
2. Discussion and analysis
2.1 “Carbon Tax” affect strategies of firms
Doubtless, when carbon emissions are priced and simply no longer be free to emit, the industriesturn to low carbon choices. They will find it profitable to try hard to reduce emissions. Consequently, research and development about new energy, clean, efficient and climate-friendly technologies will gain more attention. And in the developed new low-carbon technologies, the firms will find substitute for their old energy-extensive one to lower their costs. Also, the carbon charge affects the strategies of firms in production, operation, management and investment.
2.1.1 Change in way of production, operation and management
The most apparent influence of carbon tax on firms is that, they as emitters pay for their emissions and have to be responsible for their activities.Take fossil fuels industry as example, increasing the price of fossil fuels will reflect retailing prices of energy and consumer products (Lidia, 2011). Under the pressure of cost, the industries have the incentive to investigate the details about carbon emissions during the process of production and operation. They may find the need to clearly define the cost pressure they can bear in the existing technical condition, and the room for improving technologies, especially for highcoal consumption enterprises. Besides, the energy-intensive firms will also focus on the accountingandsatisics, to find the constitution of cost and the main part that cause cost rising. With the information above, they would adopt more efficient forms of production and operation, cut down unnecessary spending and improve their operation efficiency.Consequently, they may find the way to reduce the carbon emissions, turn down cost, low the risk of management and seek profits at the same time.