Australia’s Clean Energy Future

For instructors looking to expand the ambit of their discussion of cap and trade systems beyond the EU-ETS, the centerpiece of Australia’s Clean Energy Future Package, its carbon pricing mechanism, is poised to begin operation on July 1, 2012. The legislation, passed in 2011, will establish a carbon price for approximately 60% of Australia’s emissions, including fuel use associated with electricity generation and industry, fugitive emissions from mines and waste, and household emissions via upstream liability for fuel distributors. The scheme will initially launch with a de facto carbon tax of AID $23. with a transition in three years to an emissions trading system.

The next few entries of this blog will summarize some good potential readings for students in this context, beginning with a two-page article (open access) in the most recent issue of Nature Climate Change. Among the take-aways from this article:

  1. Efforts to compensate households for price increases associated with the scheme include income-tax cuts for lower income groups, an approach that hasn’t been implemented often in carbon pricing schemes; however, the government has struggled to effectively communicate the impacts of this approach;
  2. While emissions-intensive industries will receive free permits valued at over AUD $3 billion, there’s very little evidence to justify shield trade-exposed companies from competition; there’s no real economic justification for payments to emissions-intensive coal-fired power plants These payments smack of the fruits of lobbying by industry;
  3. The Liberal opposition party has expressed a desire to repeal the carbon pricing scheme, and while this would likely prove to be a daunting political task, it could transpire after the next election in 2013.

The piece also includes a concise history of the development of the carbon pricing mechanism, as well as excellent discussion of the difficult politics in Australia that may imperil the scheme’s future.

Related posts:

  1. The Future of the EU-ETS
  2. The Crisis in Clean Energy?
  3. Visual Guide to Energy and Carbon Emissions in the Middle East
  4. The impacts of existing energy infrastructure
  5. Economic Implications of Greenhouse Gases Under the Clean Air Act

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