THE carbon tax has helped drive a sharp fall in the carbon emissions of Australia's power generation as coal-fired stations are closed, mothballed or sell less into the electricity market.

As Victoria's Yallourn brown coal-fired power station became the latest to announce a production cut, experts said falling electricity demand, more renewables like wind farms and solar and the carbon price were all pushing Australia's coal-fired stations out of the market, making generation cleaner.

Electricity sold into the east coast market in the three months since the tax started created on average 7.6 per cent less carbon dioxide for each megawatt hour of power, an analysis of figures compiled by the Australian Energy Market Operator shows.