Introduction and Discussion of the Australian Carbon Pollution Reduction Scheme Green Paper

This green paper from Resource Economist Caroline Hoisington examines the market development aspects of the proposed Emissions Trading Scheme in Australia.

The framers of this proposed Emissions Trading Scheme have taken on a complex challenge, in an area where experience around the world is still developing.  By signing the Kyoto agreement, Australia is joining the leading group of countries in this regard, and if the Australian plan is not weakened with measures that will undermine the incentives it creates, it may help Australia to earn new revenues and create new employment opportunities by becoming an innovation leader.

The “pillars” of the Government’s climate change strategy very clear.  They are stated as “reducing Australia’s greenhouse gas emissions, adapting to climate change that we cannot avoid, and helping to shape a global solution that both protects the planet and advances Australia’s long?term interests.”  The ETS is a major part of the carbon pollution reduction scheme.  This paper is written in response to a request for an economist’s comments on the proposed scheme and focuses therefore on a few key points and the market development aspects of the proposed ETS.