Carbon Tax and its impact on

mining industry
Aneesh Kolla 4231120
Anirudh Munagala 4218796
Manoj Chaitanya Goud Gandu 4231351
Yogi Teja Manne 4432034
Overview
Introduction
Who is liable ?
What is the price ?


Introduction
On 10 July 2011 the Australian Government
announced its intention to introduce a price of
AUD$23 for each tonne of carbon pollution released
into the atmosphere (Carbon Price).

This presentation contains a brief summary of the
Australian Governments Carbon Price scheme, and
its likely impacts on the Australian mining industry

continued
The Carbon Price has commenced on 1 July
2012, and directly applies to Australias largest
polluters. This includes coal and gas fired
power stations, other large industrial emitters of
greenhouse gases, gas retailers and coal
mines.
The Carbon Price also has indirect flow-on
effects for exploration and non-coal mining
activities in Australia in the form of increased
costs for fuel, electricity and other goods and
services.
Who is liable ???
The Carbon Price applies to four of the six
greenhouse gases counted under the Kyoto
Protocol. They are carbon dioxide, methane,
nitrous oxide and perfluorocarbon emissions
from the aluminium sector.
The Australian Government has estimated that
around 500 of Australias largest polluters are
liable to pay the Carbon Price on their
emissions.
What is the price of carbon pollution?
The Carbon Price starts at a fixed price of AUD$23 per tonne on 1
July 2012. After 1 July 2012 there will be a two-staged approach to
the Carbon Price.
During the first stage (from 1 July 2012 to 30 June 2015), the
Carbon Price will be a fixed amount for each tonne of pollution
similar to a tax.
During the second stage (from 1 July 2015 onwards), the Carbon
Price will be determined by a flexible or market price.
Fixed price 1 July 2012 to 30 June 2015
The Carbon Price per tonne starts at AUD$23 per tonne for the 2012 / 2013
year. It will then increase each year by a percentage equal to 2.5% plus the
underlying rate of inflation.
Assuming an underlying rate of inflation of 2.5%, the Carbon Price will increase
to AUD$24.15 per tonne for the 2013 / 2014 year, and AUD$25.40 per tonne for
the 2014 / 2015 year.

continued
Flexible or market price from 1 July 2015 onwards
From 1 July 2015 the price for each tonne of carbon pollution will be determined
by the market and will no longer be fixed.
However, during the first three years of the market price period (that is, from 1
July 2015 to 30 June 2018) there will be a price ceiling and a price floor.
The price ceiling will be the amount that is AUD$20 per tonne above the
expected international carbon price for 2015 / 2016, and increasing each year by
a percentage equal to 5% plus the underlying rate of inflation.
The price floor will be AUD$15 per tonne in 2015 / 2016, and increasing each
year by a percentage equal to 4% plus the underlying rate of inflation.

Why it will affect coal mining
Companies engaged in coal mining will
likely fall within the Carbon Price scheme
because fugitive emissions (that is,
methane and carbon dioxide released into
the atmosphere during coal mining) and
the running of diesel generators on a mine
site are recorded as carbon pollution
under the scheme.
Fugitive Emissions
The Government estimates that the average non-
gaseous coal mine will incur a carbon cost of
approximately $1.40 per tonne of coal produced.
The most gaseous coal mines will incur a cost of
approximately $25 per tonne before Government
assistance.
Australia produces over 400 million tonnes of coal each
year.
Even at the conservative non-gaseous mine cost of
$1.40 per tonne of coal produced, the Australian coal
mining industry will face a carbon bill of well over $500
million per annum before Government assistance.
Due to the potentially high impact of the Carbon Price scheme on
coal mining, the Australian Government has announced that it will
provide a AUD$1.2 billion assistance package (Coal Sector Jobs
Package) over six years to reward certain coal mines that reduce
their emissions based on their historical emissions intensity. The
assistance package will only apply to existing coal mines which had
high fugitive emissions (at least 0.1 tonne of carbon dioxide
equivalent per tonne of saleable coal) in 2008 / 2009.
New coal mines, or expansions of production at existing coal mines,
will not receive assistance under the Coal Sector Jobs Package. As
a result, any proposed investment in, or development of, a coal mine
will need to take into account the full impact on the cost of producing
coal where the Carbon Price applies to that mine.
Emission reductions
Australia's greenhouse gas emissions
from electricity generation have fallen to a
10-year low as coal-fired power slumped
to its lowest level in a decade
The share of renewable energy in the
National Electricity Market (NEM) has
soared beyond 12 per cent
Source: http://www.businessspectator.com.au/news/2013/4/12/renewable-
energy/australian-co2-emissions-hit-10-year-low
Impacts & Conclusion
The carbon tax imposes costs on the
minerals industry that none of Australia's
resources competitors will face.
These same costs also undermine the
industry's capacity to introduce the low
emissions technologies needed to reduce
emissions.
The share of Coal in NEM has decreased
from 85% in 2009 to 75.8 in 2013

References
http://www.minerals.org.au/news/the_carb
on_and_mining_taxes
http://www.businessspectator.com.au/new
s/2013/4/12/renewable-energy/australian-
co2-emissions-hit-10-year-low








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