Carbon price 'essential' to Oz economy

Australian Treasurer Wayne Swan. Photo / Mark Mitchell

Introducing a carbon price to tackle climate change is "essential to the health and prosperity" of Australia's economy as countries such as China take steps to curb greenhouse gas pollution, says Australian Treasurer Wayne Swan.

"The longer we delay, the bigger the damage to the environment and to the economy," Swan said on Australia's Channel Nine television.

"We've got to make a start because if we don't, the consequences over time are horrendous."

Australian Prime Minister Julia Gillard wants to set a carbon price starting in July 2012 in preparation for a trading system that could begin as early as 2015.

The opposition Liberal-National coalition, led by Tony Abbott, vowed to fight the plan, saying it would add to household electricity bills.

Australia, the world's biggest coal exporter, has set a target of generating 20 per cent of its power from renewable energy sources such as wind and solar by 2020.

Other countries, including China, were more active than Australia. Setting a carbon price to encourage Australian businesses to reduce their emissions would drive investment in renewable energy technologies, Swan said.

Australian Infrastructure Minister Anthony Albanese, speaking on Channel Ten's Meet the Press, said introducing a price on carbon was "critical."

Swan said: "A carbon price is absolutely essential to the health and prosperity of our economy. The Chinese are taking dramatic action to reduce their emissions."

- BLOOMBERG