Norway introduced a carbon tax in 1991. It was set at $US65 per tonne. The carbon tax was placed on fossil fuels, and applied to petrol and diesel. As a result of the carbon tax, Norway has the most expensive fuel in Europe. While the current price for unleaded petrol in Australia is $1.35 per litre, in Norway fuel is $2.45 per litre. Diesel is only slightly cheaper.
So what has a carbon tax done for Norway’s CO2 emissions over the twenty years it has had a carbon tax? CO2 emissions have gone up in Norway by !5% per capita.
All the economists in Australia who have lined up behind the Labor Federal governments carbon tax say it will cause real world changes in behaviour and reduce CO2 production. However as we know economists get it wrong most of the time, and Norway is an example of where, despite the introduction of a carbon tax, it has not changed behaviour, and not dropped the production of CO2.
Norway does not have to worry about a carbon tax on its electricity production, as 98% of its power comes from Hydro.
The Gillard Labor government has dropped fuel out of the carbon tax, so the burden of reducing emissions goes onto an even smaller number of industries, making the pain for those industries even more severe.