Component 1 – The proposal would place a price on direct greenhouse gas emissions (scope 1 emissions) for facilities with annual carbon-dioxide-equivalent greenhouse gas emissions of over 25,000 tonnes (scope 1 and scope 2 emissions). Facilities whose primary purpose is agriculture or transportation would be exempt from the proposal.

• The proposed carbon price would be set at $32 per tonne of direct carbon-dioxide-equivalent greenhouse gas emissions in 2019-20, indexed according to the consumer price index for the next two years, before rising to $43 per tonne in 2022-23. The carbon price would grow at 4 per cent per year from 2023-24.
• The costs of carbon emissions would be deductible for tax purposes.
• Emissions-intensive trade-exposed industries will receive 80 per cent of their scope 1 and scope 2 emissions as free permits in the first year. The free permit allocations to emissions-intensive trade-exposed entities would reduce to zero over eight years.
• The current Emissions Reduction Fund would be converted to the Carbon Farming Initiative.

Component 2 – This component would make the following changes to the energy supplement as a means of compensating households for the impact of the proposed carbon price on their electricity bills.

• Increase the base energy supplement payment rate by 30 per cent for all eligible payments.
• Reinstate energy supplement eligibility to the following payment recipients/cardholders:
  • Family Tax Benefit – Part A
  • Family Tax Benefit – Part B
  • Commonwealth Seniors Health Card.
• Index the energy supplement by changes in the headline consumer price index every six months from 1 January 2020.

Both components of this proposal would have effect from 1 July 2019.