The Federal government has set a precedent with its recommendation in its emission trading greenpaper to move some excise taxes to emissions permits taxes. The same idea can be used to include China and India and all coal buying customers and countries into an emissions reduction scheme.
Here is how it could work. The government is collecting increased royalties and taxes on the sale of coal as a result of the resources boom. Rather than these windfall profits going into consolidated revenue let it go into an emissions reduction fund. Now give this money to the purchasers of our coal – but with a proviso. The purchasers must spend the money in Australia building renewable energy infrastructure like geothermal, solar thermal, windmills, tidal power, and solar voltaics to generate new energy. The purchasers will own the infrastructure but it will be in Australia.
What this means is that the price of coal does not go up. The government does not get windfall taxes. The buying countries and industries do not see the taxes as an imposition because they end up with a stake in the new energy infrastructure which brings assured energy supplies and Australia ends up with green energy sources, of which we have an abundance, which we can now tax.
We all win and emissions are reduced.