Like what you've read?

On Line Opinion is the only Australian site where you get all sides of the story. We don't
charge, but we need your support. Here�s how you can help.

  • Advertise

    We have a monthly audience of 70,000 and advertising packages from $200 a month.

  • Volunteer

    We always need commissioning editors and sub-editors.

  • Contribute

    Got something to say? Submit an essay.


 The National Forum   Donate   Your Account   On Line Opinion   Forum   Blogs   Polling   About   
On Line Opinion logo ON LINE OPINION - Australia's e-journal of social and political debate

Subscribe!
Subscribe





On Line Opinion is a not-for-profit publication and relies on the generosity of its sponsors, editors and contributors. If you would like to help, contact us.
___________

Syndicate
RSS/XML


RSS 2.0

CPRS not the cheapest carbon cutter

By Geoff Carmody - posted Wednesday, 16 September 2009


The Senate Select Committee on Climate Policy wanted modelling answers for all six options it discussed (CPRS included). This is prudent (i) to ensure we have the lowest-cost policy, and (ii) to ensure all models are transparent and peer-reviewable.

The preliminary Access Economics analysis is aimed at this wider debate. The authors note that more work is needed.

I suggest three reasons why the consumption model should be considered as one option in this wider debate.

Advertisement

First, preliminary modelling suggests it could be 50 per cent more cost-effective than the CPRS in reducing Australian greenhouse gas emissions (see Charts 1 and 2).

Second, it should be even cheaper in reducing global greenhouse gas emissions than the CPRS, because, unlike the CPRS, it also reduces Australian imports of such emissions and eliminates “carbon leakage” from Australia (see Chart 3).

Third, by eliminating “carbon leakage” (due to lost trade competitiveness) as a reason not to act, this model could be a template for all countries. By eliminating trade competitiveness concerns, it greatly improves chances of securing a global deal.

This third consideration is crucial.

Without a global deal, Australia’s efforts to reduce its own emissions (no matter how large or small) matter little in the global scheme of things.

We’re too small on the absolute emitters scale.

Advertisement

Chart 3. Cost-penalty indexes, CPRS, CPRS-EITE and consumption bases, 2020, global effects

Chart3

Source: Based on Access Economics’ preliminary modelling results for CEDA (derived from Table 4.2, page 15).

In the next couple of months, how about a thorough quantitative analysis managed by the Productivity Commission, incorporating the best modelling available (private and public), covering the range of policy options considered by the Senate Select Committee?

We have time to get it right. We’re not debating emissions reduction targets here. We’re just looking at how best to hit them.

We’ll have plenty of time to regret our mistake if we get the policy design wrong.

  1. Pages:
  2. 1
  3. 2
  4. Page 3
  5. All

First published in The Australian Financial Review on September 14, 2009.



Discuss in our Forums

See what other readers are saying about this article!

Click here to read & post comments.

6 posts so far.

Share this:
reddit this reddit thisbookmark with del.icio.us Del.icio.usdigg thisseed newsvineSeed NewsvineStumbleUpon StumbleUponsubmit to propellerkwoff it

About the Author

Geoff Carmody is Director, Geoff Carmody & Associates, a former co-founder of Access Economics, and before that was a senior officer in the Commonwealth Treasury. He favours a national consumption-based climate policy, preferably using a carbon tax to put a price on carbon. He has prepared papers entitled Effective climate change policy: the seven Cs. Paper #1: Some design principles for evaluating greenhouse gas abatement policies. Paper #2: Implementing design principles for effective climate change policy. Paper #3: ETS or carbon tax?

Other articles by this Author

All articles by Geoff Carmody

Creative Commons LicenseThis work is licensed under a Creative Commons License.

Article Tools
Comment 6 comments
Print Printable version
Subscribe Subscribe
Email Email a friend
Advertisement

About Us Search Discuss Feedback Legals Privacy