Deutsche Welle: The introduction of a carbon levy for the 500 biggest CO2 emitters has been very controversial. What was behind the opposition?

Kristian Wolf: The price these companies now have to pay for every metric ton of CO2 emitted hits a lot of firms that have been fighting to cope with rising prices in Australia for several years already. A lot of people are worried that the additional costs will have to be passed on to the consumer.

But another interesting thing is that the whole topic of global warming is being intensely discussed again, in public and in the media. At this stage, more that 50 percent of the CEOs of the affected companies have expressed doubt about whether the warming is actually caused by CO2 emissions. That is 10 percent up on previous years.

A considerable portion of the revenue from the carbon levy is going to flow into subsidies and tax relief to take some of the pressure back off industry and the consumers. Is that not counter-productive?

The money is to be used to make Australian industry more energy efficient and to help low-income households cope with higher prices for electricity and consumer goods. If you compare this with the measures that were undertaken by the German government to promote renewable energy, you can see that Germany has really benefitted from those. There are basically two goals: first to reduce CO2 emissions, secondly to help businesses to be more competitive by giving them an incentive to be more energy efficient. Then they would be able to compete against imported products and at the same time be more attractive on the world market.

What do think this could mean for the development of renewable energy sources in a country that gets more than 80 percent of its power from coal and is also the world's top coal exporter?

Of course, the coal industry will stand to lose. But you have to take various different starting points into consideration. There are some companies which have been preparing for the introduction of this carbon price for quite some time. They have carried out a lot of refitting, so they now find themselves in a fairly good position.

On the other hand the dirtiest power stations, especially the lignite stations, are having problems re-financing their loans. The banks don't think the business model will work anymore. In the federal state of Victoria, for instance, with the major city of Melbourne, some of these lignite-run plants have a question mark over their future in the medium term. And in that very area, we are seeing big investments in wind energy, which has now become competitive. So basically, a transition process which was going to happen anyway has been sped up by putting a price on carbon emissions.

How is the solar industry developing in Australia?

As in so many countries at the moment, the solar sector is also undergoing a transition process. It is moving away from the stage of constantly hunting for subsidies to becoming an industry that sees it can stand on its own two feet. Because of rising electricity prices, we are seeing that consumers are becoming more interested in producing their own power. And the pressure from China, which has led to a sharp drop in the price of modules, is making it increasingly attractive for consumers to opt for solar.

The next step is to be the introduction of emissions trading in 2015. Do you think this is an effective measure to transform energy production in Australia and reduce the use of fossil fuels?

You have to keep the long-term goals in mind. That puts the short-time negative impacts into perspective. Some traditional sectors of industry, which are energy-intensive, will suffer, and some jobs may be lost here and there. But once CO2 emissions are reduced, in the long term Australia will be more competitive in a globalized world, in which China will be increasingly influential. But that is not going to be a painless process.

Australia does not have a good reputation as far as halting climate change is concerned. Do you think the CO2 levy could help Australia drop out of its position as one of the countries with the highest per-capita CO2 emissions?

Australians are thinking more and more about energy efficiency and their CO2 emissions. But you have to take some specific factors into account. Australia is a huge country with a relatively small population, spread out over huge distances. Energy-intensive companies play a major role in the economy. You cannot completely transform the whole economic structure of a nation overnight. However, I do believe that the Australians have grasped the problem and that they are already starting to pick up on the opportunities involved in the climate change issue.

Interview: Irene Quaile
Editor: Saroja Coelho