Under the Clean Energy Future Plan, carbon will be priced at $23 per tonne from 1 July 2012, and will rise by 2.5 per cent each year during a three-year fixed price period until 1 July 2015. The price mechanism will then transition to an emissions trading scheme, where the price will be determined by the market.

Prime Minister Julia Gillard has said that the proposed legislation will cut 159 million tonnes of carbon pollution per year from the Australian atmosphere by the year 2020.

Approximately 500 Australian businesses will be required to pay for their carbon emissions under the mechanism, and revenue collected will be used to support employment growth and project investment in clean energy and climate change programs.

Highlights from the package include:

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  • The establishment of a Clean Energy Finance Corporation responsible for investing $10 billion in businesses seeking to launch innovative clean energy proposals and technologies, as well as in transforming existing manufacturers to meet the demand for inputs such as wind turbine blades and solar photovoltaic panels
  • The commencement of an Australian Renewable Energy Agency in the Federal Resources, Energy and Tourism portfolio to manage $3.2 billion in existing Federal Government grants for research and development into renewable energy technologies and initiatives to bring them to market
  • A $200 million Clean Technology Innovation Program by the Federal Department of Innovation, Industry, Science and Research to support business investment in renewable energy, low-emissions technology and energy efficiency
  • The establishment of an Energy Security Fund and a new Energy Security Council to provide funding and direction for the closure of emissions-intensive generators, to remove up to 2,000 megawatts of current capacity and replace it with clean energy capacity
  • The expansion of the Australian Energy Market Operator’s planning scenarios for the future development of the electricity grid, to prepare for the clean energy transformation and greater integration of renewable energy
  • A $40 million Remote Indigenous Power Program providing incentives for remote indigenous communities to invest in solar power
  • The implementation and expansion of various community-based grant programs designed to aid industry associations and non-government organisations in promoting energy efficiency measures among small businesses and community groups.

A snapshot of the Australian clean energy industry’s response to the Clean Energy Future Plan is available here.