One way to gauge the cost of the government’s policy to reduce greenhouse gas emissions by between 62 and
70 per cent from 2005 levels by 2035 is to consider the uniform, economy-wide carbon tax that would be
required to achieve such a reduction. The level and revenue of such a tax can be inferred from the ‘marginal
abatement incentives’ (MAIs) the Treasury published in economic modelling that accompanied the
government’s new target.
• Under the Treasury’s modelled MAIs, a $290 billion tax burden would be required over a decade to
meet a 65 per cent reduction in emissions from 2005 levels.
• The annual tax haul, reaching a maximum of $29.7 billion in 2029, would be around five times
greater than the largest annual amount collected under the Gillard government’s carbon tax
introduced in 2012.
• International literature suggests it’s unlikely governments can achieve their emission reductions
targets without a carbon price significantly greater than the Treasury’s estimated marginal
abatement incentives.
• The government is relying very heavily on ‘carbon sinks’ to achieve its ultimate 2050 ‘net zero’ emissions
reduction goal.
• Land Use and Forestry abatement is projected to more than double to 167 million tonnes a year
by 2050, which would consume an additional arable land area around twice the size of Tasmania.
• Similarly, the expected reductions in emissions from the energy sector are very large, unprecedented in
scale, and appear infeasible. No substantive new regulations or taxes accompanied the government’s
new emissions target, suggesting these are still in the pipeline.
