By Matt Siegel
(Reuters) - Australia's Parliament on Thursday repealed the country's controversial carbon tax and the emissions trading scheme that was to succeed it in 2015, signalling an end to what would have been the third largest such system after Europe and Guangdong.
The schemes were part of a larger package of legislation to combat climate change passed in 2011, elements of which were preserved to win the support of Clive Palmer, whose Palmer United Party holds the balance of power in the Senate.
While investors are likely to welcome the repeal because it ends the long running debate over long-term carbon pricing, there is a great deal of lingering uncertainty about what will replace it and how Australia will meet its commitments.
WHAT WAS REPEALED:
1. The carbon tax, a fixed price that saw 348 of Australia's biggest companies pay A$25.40 for each tonne of CO2 they emit, was the centerpiece of Australia's climate change policy. After three years of fierce criticism, it is gone.
2. The carbon tax was to have moved from a fixed price to a floating Emissions Trading Scheme from July 1, 2015 that would have allowed companies to trade pollution credits on the open market. That trading scheme will never come into effect.
WHAT IS LEFT:
1. The Clean Energy Finance Corporation, a A$10 billion ($9.4 billion) government-backed loan agency that invests in wind, solar, and bioenergy projects in Australia survived the axe. It has a total loan portfolio of over A$700 million.
2. The Renewable Energy Target scheme, designed to ensure that 20 per cent of Australia's electricity comes from renewables by 2020, was another on Palmer's list of elements that must be retained to gain his support for repeal.
3. The Climate Change Authority provides independent advice to the government on the operation of the carbon price, emissions reduction targets, caps and trajectories, and other climate change initiatives.
WHAT MAY REPLACE IT:
1. Abbott has long proposed replacing the carbon tax with a so-called Direct Action scheme that would pay big emitters to cut carbon levels.
The plan has been widely dismissed by both industry and climate scientists and Palmer has pledged to vote against the "hopeless" plan, leaving great doubt about the mechanism by which Australia will meet its remaining targets.
2. Palmer wants the carbon tax replaced by a "dormant" emissions trading scheme that would have a fixed price of zero dollars until Australia's leading trade partners - China, the United States, the European Union, Japan, South Korea and India - adopt their own scheme to which Australia can link.
($1 = 1.0687 Australian Dollars)
(Reporting by Matt Siegel)