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Australian Energy Producers Journal Australian Energy Producers Journal Society
Journal of Australian Energy Producers
RESEARCH ARTICLE (Non peer reviewed)

The role of the tax system in a greener future

Janelle O’Hare
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PwC, Brookfield Place, 125 St Georges Terrace, Perth, WA 6000, Australia.Email: janelle.ohare@pwc.com

The APPEA Journal 60(2) 497-500 https://doi.org/10.1071/AJ19103
Accepted: 15 April 2020   Published: 15 May 2020

Abstract

Ahead of the commencement of action against climate change in 2020 under the Paris Agreement, COP24 saw nations come together to design the rule book for global emissions reductions. Australia also reinforced its commitment to the Paris Agreement and its emission reduction targets. Critical to this is the design of the rules for international trade in emissions permits or credits, which were due to be agreed in Madrid as part of the COP25 in December 2019. However, the participants failed to come to any consensus, getting caught up in technical issues such as the rules for carbon market mechanisms. Instead we wait for an intersessional meeting in Bonn in June 2020 and COP26 in Glasgow in November 2020. The tax policy approach and framework adopted in relation to the energy transition, including for example the introduction and tax treatment of any carbon price or emissions trading scheme, has the potential to either support or distort the ultimate objectives of the transition. So, what does the transition to a greener future mean for the tax mix and how it will it impact the revenues of government? What role does tax play in the energy transition? What are the current rules in Australia and how do they compare to other fiscal regimes globally? How can existing rules in Australia be adapted to best support the effective design of carbon pricing policies? What reforms are necessary?

Keywords: carbon price, emissions trading scheme, energy transition, resources, fiscal settings, R&D incentives, technology, tax reform, tax policy.

Janelle O’Hare is the National Tax Leader for Energy and Resources in PwC. She is a partner in the Corporate Tax team based in Perth. She has over 19 years of tax consulting experience. Janelle advises a broad range of operators, joint venture participants, service providers and investors in the energy and resources industry, with a focus on the oil and gas sector.


References

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OECD (2019). Taxing Energy Use 2019 – Using Taxes for Climate Action. (OECD Publishing: Paris.) Available at https://doi.org/10.1787/058ca239-en [Verified 16 April 2020].

PwC and Jacobs (2019). The Future of Energy – Australia’s Energy Choice. Available at https://www.pwc.com.au/power-utilities/future-of-energy/future-of-energy.pdf [Verified 16 April 2020].

Siriwardana, M., Meng, S., McNeill, J., and Nelson, T. (2015). Border adjustments under unilateral carbon pricing: the case of Australian carbon tax. Institute for Rural Futures (UNE Business School). Available at https://www.une.edu.au/__data/assets/pdf_file/0005/112766/2015-Border-adjustment.pdf [Verified 16 April 2020].