The measure, previously passed by the House of Representatives, cleared the Senate 36-32. It will go into effect July 1 after passing royal muster, The Australian reported.
The legislation, passed by Labor and Green lawmakers, will impose a $23 per tonne (1.1 ton) tax on carbon emissions on Australia's 500 largest carbon dioxide emitters, Sky News reported. The government's aim is to wean the country off fossil fuels to cleaner forms of energy.
Australia accounts for about 1.5 percent of global CO2 emissions but ranks at the top of developed nations on a per-capita basis because of its heavy reliance on coal for the production of electricity, Sky News said. Australia's goal is to be 5 percent below 2000 emission levels by 2020.
"Today marks the beginning of Australia's clean energy future," Finance Minister Penny Wong told the Senate after the vote. "This is an historic moment, this is an historic reform, a reform that is long overdue."
Conservative opposition leader Tony Abbott, who was out of the country Tuesday, vowed to work to get the carbon tax revoked.
"The longer this tax is in place, the worse the consequences for the economy, jobs and families," he said in a statement. "It will drive up the cost of living, threaten jobs and do nothing for the environment."
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