Query: Environment Minister Greg Hunt the Coalition's emissions reduction fund, at $13.95 per tonne of carbon, is around 1 per cent of the cost of reducing carbon under the former Labor government's carbon pricing scheme, which he cost $1,300 a tonne.

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Carbon offset <=SEP=> A carbon offset is a reduction in emissions of carbon dioxide or greenhouse gases made in order to compensate for or to offset an emission made elsewhere .   Carbon offsets are measured in metric tons of carbon dioxide-equivalent ( CO2e ) and may represent six primary categories of greenhouse gases : carbon dioxide , methane ( CH4 ) , nitrous oxide ( N2O ) , perfluorocarbons ( PFCs ) , hydrofluorocarbons ( HFCs ) , and sulfur hexafluoride ( SF6 ) . One carbon offset represents the reduction of one metric ton of carbon dioxide or its equivalent in other greenhouse gases .   There are two markets for carbon offsets . In the larger , compliance market , companies , governments , or other entities buy carbon offsets in order to comply with caps on the total amount of carbon dioxide they are allowed to emit . This market exists in order to achieve compliance with obligations of Annex 1 Parties under the Kyoto Protocol , and of liable entities under the EU Emission Trading Scheme . In 2006 , about $ 5.5 billion of carbon offsets were purchased in the compliance market , representing about 1.6 billion metric tons of CO2e reductions .   In the much smaller , voluntary market , individuals , companies , or governments purchase carbon offsets to mitigate their own greenhouse gas emissions from transportation , electricity use , and other sources . For example , an individual might purchase carbon offsets to compensate for the greenhouse gas emissions caused by personal air travel . Many companies ( see list ) offer carbon offsets as an up-sell during the sales process so that customers can mitigate the emissions related with their product or service purchase ( such as offsetting emissions related to a vacation flight , car rental , hotel stay , consumer good , etc. ) . In 2008 , about $ 705 million of carbon offsets were purchased in the voluntary market , representing about 123.4 million metric tons of CO2e reductions . Some fuel suppliers in the UK offer fuel which has been carbon offset such as Fuel dyes .   Offsets are typically achieved through financial support of projects that reduce the emission of greenhouse gases in the short - or long-term . The most common project type is renewable energy , such as wind farms , biomass energy , or hydroelectric dams . Others include energy efficiency projects , the destruction of industrial pollutants or agricultural byproducts , destruction of landfill methane , and forestry projects . Some of the most popular carbon offset projects from a corporate perspective are energy efficiency and wind turbine projects .   Carbon offsetting has gained some appeal and momentum mainly among consumers in western countries who have become aware and concerned about the potentially negative environmental effects of energy-intensive lifestyles and economies . The Kyoto Protocol has sanctioned offsets as a way for governments and private companies to earn carbon credits that can be traded on a marketplace . The protocol established the Clean Development Mechanism ( CDM ) , which validates and measures projects to ensure they produce authentic benefits and are genuinely `` additional '' activities that would not otherwise have been undertaken . Organizations that are unable to meet their emissions quota can offset their emissions by buying CDM-approved Certified Emissions Reductions . Emissions from burning fuel , such as red diesel , has pushed one UK fuel supplier to create a carbon offset fuel named Carbon Offset Red Diesel .   Offsets may be cheaper or more convenient alternatives to reducing one 's own fossil-fuel consumption . However , some critics object to carbon offsets , and question the benefits of certain types of offsets .  Due diligence is recommended to help businesses in the assessment and identification of `` good quality '' offsets to ensure offsetting provides the desired additional environmental benefits , and to avoid reputational risk associated with poor quality offsets .   Offsets are viewed as an important policy tool to maintain stable economies and to improve sustainability . One of the hidden dangers of climate change policy is unequal prices of carbon in the economy , which can cause economic collateral damage if production flows to regions or industries that have a lower price of carbon -- unless carbon can be purchased from that area , which offsets effectively permit , equalizing the price .

Carbon Pollution Reduction Scheme <=SEP=> The Carbon Pollution Reduction Scheme ( or CPRS ) was a cap-and-trade emissions trading scheme for anthropogenic greenhouse gases proposed by the Rudd government , as part of its climate change policy , which had been due to commence in Australia in 2010 . It marked a major change in the energy policy of Australia . The policy began to be formulated in April 2007 , when the federal Labor Party was in Opposition and the six Labor-controlled states commissioned an independent review on energy policy , the Garnaut Climate Change Review , which published a number of reports . After Labor won the 2007 federal election and formed government , it published a Green Paper on climate change for discussion and comment . The Federal Treasury then modelled some of the financial and economic impacts of the proposed CPRS scheme .   The Rudd government published a final White Paper on 15 December 2008 , and announced that legislation was intended to take effect in July 2010 ; but the legislation for the CPRS ( aka ETS ) failed to gain the numbers in the Senate and was twice rejected creating a double dissolution election trigger . A bitter political debate within the Coalition Opposition saw Opposition leader Malcolm Turnbull lose the leadership to the anti-CPRS Tony Abbott . The Rudd government did not call an election and in April 2010 , Rudd deferred plans for the CPRS .   After the 2010 federal election , the Gillard Government was able to get the Carbon Pricing Mechanism ( CPM ) passed into law as part of the Clean Energy Futures Package ( CEF ) in 2011 , and became effective on 1 July 2012 . However , after the 2013 federal election there was a change in government , and the Abbott Government repealed the CEF package on 17 July 2014 . Due to the great deal of policy uncertainty surrounding the scheme , organizations in Australia responded in a rather informal and tepid manner and largely withheld from making any large-scale investments in emissions reductions technology during the scheme 's operation .

Carbon tax <=SEP=> A carbon tax is a tax levied on the carbon content of fuels . It is a form of carbon pricing . Carbon is present in every hydrocarbon fuel ( coal , petroleum , and natural gas ) and converted to carbon dioxide and other products when combusted . In contrast , non-combustion energy sources -- wind , sunlight , geothermal , hydropower , and nuclear -- do not convert hydrocarbons to . is a heat-trapping `` greenhouse '' gas which represents a negative externality on the climate system ( see scientific opinion on global warming ) . Since GHG emissions caused by the combustion of fossil fuels are closely related to the carbon content of the respective fuels , a tax on these emissions can be levied by taxing the carbon content of fossil fuels at any point in the product cycle of the fuel .   Carbon tax offers social and economic benefits . It is a tax that increases revenue without significantly altering the economy while simultaneously promoting objectives of climate change policy . The objective of a carbon tax is to reduce the harmful and unfavorable levels of carbon dioxide emissions , thereby decelerating climate change and its negative effects on the environment and human health .   Carbon taxes offer a potentially cost-effective means of reducing greenhouse gas emissions . From an economic perspective , carbon taxes are a type of Pigovian tax . They help to address the problem of emitters of greenhouse gases not facing the full social cost of their actions . Carbon taxes can be a regressive tax , in that they may directly or indirectly affect low-income groups disproportionately . The regressive impact of carbon taxes could be addressed by using tax revenues to favour low-income groups .   A number of countries have implemented carbon taxes or energy taxes that are related to carbon content . Most environmentally related taxes with implications for greenhouse gas emissions in OECD countries are levied on energy products and motor vehicles , rather than on emissions directly .   Opposition to increased environmental regulation such as carbon taxes often centers on concerns that firms might relocate and/or people might lose their jobs . It has been argued , however , that carbon taxes are more efficient than direct regulation and may even lead to higher employment ( see footnotes ) . Many large users of carbon resources in electricity generation , such as the United States , Russia , and China , are resisting carbon taxation .