Emissions trading in Australia
The Department of Climate Change website (see link below) has detailed information about emissions trading. The proposed scheme from the Federal government is briefly outlined below.
It's a cap and trade scheme
'Cap and trade' is a widely used emissions trading structure where:
- total emissions are 'capped' for major emitters
- emitters are granted permits up to the cap
- trading is allowed so that the market can meet necessary emission reductions cost-effectively
- over time, total allowable emissions are reduced.
The European Union emissions trading scheme is based on this approach.
It effectively reduces emissions
Australia will be on a path to reducing emissions by 60% by 2050 using the emissions trading scheme, as the cap of allowable emissions is reduced over time and the market includes environmental costs in overall costs.
It's economically responsible
Emissions trading will be complemented by measures that include a Mandatory Renewable Energy Target. This will drive investment in renewable energy and low emissions technology without undermining Australia's competitiveness.
It recognises the need to act now
A scheme needs to start as soon as possible to lessen the growing costs of inaction. Economic modelling clearly shows that early action is far less expensive than late action. The white paper on the emissions trading scheme - the Carbon Pollution Reduction Scheme - was released 15 December 2008. The white paper is available from the website of the Department of Climate Change, see link at bottom of page.
