It's not even been two months since the introduction of the carbon tax, but the government has already decided to make changes to the controversial charge.
Australia will not only be scrapping its carbon floor price (which was set at $15 a metric ton), but it will also be linking up its CO2 trading schemes with ones in the European Union (EU) in an effort to make it cheaper for Aussie businesses to buy credit.
The EU is not doing it out of the goodness of its heart – the move is expected to provide a much-needed boost for its flailing economy.
Europe has seen confidence in its carbon market effectively collapse in recent months as oversupply has caused prices to plummet, removing any incentive to upgrade to greener technology such as solar energy.
Under the new agreement, Australian firms can use EU allowances for up to 50 per cent of their liabilities by 2015, although their European counterparts will need to wait until at least 2018 to receive the same benefits.
Australian climate change minister Greg Combet said: "This means that from July 1 2015, Australia's carbon price will effectively be the same as that in our second-largest trading bloc. The same carbon price will cover 530 million people."
According to Mr Combet, Europe is not the only place where Australia is looking to forge partnerships, with talks ongoing with New Zealand about also linking their carbon schemes.
He implied businesses were unhappy with the carbon tax, claiming enterprises want more flexibility on carbon prices once the country moves to a trading scheme.
The plans were backed by the Australian Greens, who support the minority government and have quite a bit of clout when it comes to policy making.
Leader of the Greens Christine Milne said: "We are effectively exchanging a short-term floor price for a long-term trajectory, for stability."
However, not everyone was cheery about the developments, with the Australian Chamber of Commerce and Industry (ACCI) keen to rain on the government's parade.
The ACCI stated the announcement was almost meaningless, as the country's firms will still be short-changed by the world's "most intrusive" environmental levy.
"Today's announcement cannot whitewash the bigger picture, which is the futility of the world's largest carbon tax that is still not linked to global action that imposes comparable costs on our trading competitors, especially big industrialising nations in our region," chief executive Paul Anderson explained.
Posted by Bob Dawson