The Abbott Government has announced a plan to introduce a “zero emissions” energy price that would be paid by households and businesses.
It will also provide an extra $1,000 to households for electricity used in their home.
The move comes as the Abbott Government continues to face growing calls for it to reduce the number of coal fired power stations and for more renewable energy.
In July, it released a report recommending the government increase the electricity price by 2.5 per cent in 2019-20 and by 3 per cent by 2020-21, citing the risks to the environment and local communities.
The cost of electricity is expected to rise by 1.6 per cent annually over the next two years.
This will be offset by an increase in the levy on carbon dioxide emissions, according to the report.
The electricity price is the largest component of the budget.
It is forecast to be $2.3 billion over the decade.
The budget also includes $400 million for “smart grids”, the network of electricity networks that can be used to manage electricity demand and supply.
It also provides $50 million to support “smart energy” technologies, including solar and wind power, which will be available to households.
But there are fears that the Government will miss its target of cutting greenhouse gas emissions by 30 per cent below 2005 levels by 2030.
“This plan will provide the certainty and stability that our communities need to plan for a low carbon economy,” the Prime Minister said in a statement.
“It is also a critical step to ensure that we can move away from coal-fired electricity generation and the emissions that fuel it.”
This plan will be paid for through an extra 2.3 per cent levy on the cost of carbon dioxide.
The carbon tax is a $100 per tonne levy on fossil fuels.
This measure has a range of exemptions including: petrol for gas and diesel; electricity generated by renewable energy; and natural gas.
In January, the Abbott government announced a proposal to abolish the carbon tax.
This would see it replaced by a carbon tax that will be indexed over a 10-year period to keep the tax in line with inflation.
This tax will be applied to all household energy bills, including electricity, heating, cooking and transport fuel.
The Prime Minister is also seeking to make the carbon price more progressive by allowing households to choose their own energy tariffs, a move the Greens say will encourage businesses to invest in green technologies.
But it is not clear how this change would work in practice, as the carbon levy would only apply to households with more than one energy provider.
“We need a strong energy security plan for all Australians, but the Turnbull Government’s carbon tax won’t deliver that,” Greens MP David Shoebridge said in the Senate.
“They’re not making enough progress on this.”
The Coalition has promised to “reform” the carbon pricing system.
This means that the price would be increased on the last day of each financial year, and then again on the first of the next financial year.
This could be done through a mix of rebates and tax credits, or by increasing the price of electricity.
But the Coalition says it would not implement a carbon price for the first two years of a financial year because it would have to implement a rebate for households.
The Government also wants to scrap the carbon-capture and carbon trading scheme, which would have raised about $7.5 billion from June 2018 to December 2019.
It has also committed to end the national carbon tax in 2020, but will not provide details about how it will be implemented.
It says it will continue to provide “robust support” to renewable energy projects.
The Turnbull Government has also promised to phase out the Renewable Energy Target (RET) by 2027.
However, the RET is only set to expire in 2037.
This is because the RET, which provides subsidies to electricity generators for up to 20 years, is not indexed to inflation.
“Renewables are not the only source of energy supply that can provide energy security for Australia.
Our country has more than half of the world’s clean, renewable energy resources,” the PM said.
“In this election, we need to deliver on that promise and make sure our energy security is guaranteed for the generations to come.”