Thanks to a narrow victory for the government, Australia now looks likely to join the EU and New Zealand in introducing a comprehensive policy to make carbon polluters pay for the damage they cause. This is very good news. It has been an uphill battle, with the opposition and business lobby all but claiming that the sky would fall in should the bill be passed.

But once the dust settles and the lamenting subsides, the majority of people of Australia are likely to find that the bill passed on Wednesday benefits them. Much of the money raised from the carbon price of £15 per tonne of emissions will be recycled in the form of tax breaks and compensatory payments.

It will also be used to stimulate investment in new clean energy technologies leading to new jobs and increased inward investment. Hopefully over time this will boost Labour and the Greens' popularity, so ensuring that the policy is protected – despite opposition leader Tony Abbott's "blood promise" to repeal the legislation.

Australia's energy system is among the most polluting in the world thanks to its heavy reliance on coal, but Australia's climate is vulnerable to the impact that climate change brings. Acting to reduce emissions is in the country's self-interest in the longer term, especially if it can act as an inspiration for other countries to follow.

South Korea and China are looking to introduce emissions-trading schemes and all eyes in the global carbon market are now firmly looking eastwards. There could be significant advantages for Australia's financial institutions in being amongst the first to participate in this market, just as London has benefited from being the hub of the European carbon market.

The carbon price is fixed for three years, unlike in the European system where prices have reached rock bottom thanks to an oversupply of pollution permits. This has interesting implications for the EU, which has long basked in the glory of being able to claim that it is leading the world on climate change. If the bill passes into law, Australia will be able to fairly claim that it has now taken the lead.

Being out in front has its advantages and confers a moral superiority but there will always be forces of conservatism who will be made to feel uncomfortable. It is therefore more important than ever that countries in the early adopters group work together to defend their actions and encourage more into the fold.

No one, in Europe or Australia, can now claim to be going it alone, and with luck soon many more will step up and join the race to the top. As Australia has shown this will not be easy, but we must defy those who would rather participate in a race to the bottom where ultimately everyone is a loser.