Currently, when you buy something that relies on carbon-intensive materials or manufacturing, the price you pay does not reflect the cost it has on the environment. Is the carbon tax a brilliant solution to climate change or does it mean pain with no environmental gain?

A price on carbon implies that polluters will pay per tonne of carbon they release into the atmosphere. The cost will initially be $23, and will gradually increase until 2015, when a trading scheme will be implemented. This means that products that rely on carbon emissions for their production will become more expensive; however, this also means that products produced through cleaner processes will be become more competitive in price.

This is thought to be the most effective way to reduce carbon output and reduce climate change. The idea is that if pollution-intensive processes make goods more expensive, companies will try to reduce their emissions in order to lower their costs to remain competitive and households will have a price incentive to save energy and buy less carbon-intensive goods and services.

It is estimated that the average family will see an increase in weekly costs of $10, rising to $13.40 by 2015-16. However, the government ensures that the majority of Australians will be fully compensated for this cost, and many will actually end up better off. The revenue taken in by the carbon tax will be put towards compensating taxpayers and affected companies.

Anti-Carbon Tax Campaign
The Australian Trade and Industry Alliance anti-carbon tax campaign argues that the carbon tax “means pain but no climate change gain”. They believe that the carbon tax disadvantages Australian businesses on the world market, threatens jobs, raises the cost of living for households and ultimately, won't make any difference to global carbon emissions. 

So, what are your thoughts? Will putting a price on carbon save the environment or simply strain our economy?

* You can get an estimate of what compensation you are entitled to under the carbon pricing scheme.

* The Sydney Morning Herald published a graphic which illustrates how carbon pricing works; check it out!