Tutorial 3

CLIMATE CHANGE ECONOMICS AND POLICY

The carbon tax policy of the labor government has was focusing on taxing the carbon emissions in companies. The carbon pricing mechanism of the labor government started from the year 2012 to the year 2014 where the companies were being taxed for the tonnes of carbon they emitted. The tax policy was aimed at creating some incentives for the companies to ensure that they work towards reducing the carbon emissions. The emissions reduction fund of coalition government is similar to the former labor government as they both work toward reducing the carbon emission where the companies emitting a high level of carbon were taxed heavily. Their tax policies were both geared towards ensuring that the carbon emission is reduced. The former government had a direct action in the process of reducing the emission of carbon where it had auction scheme of emissions reduction fund involving $13.95 for each tonne of carbon (Böhringer, 2005).

The main difference that sets apart the carbon tax policy of emission reduction fund of the coalition government from the carbon tax policy of the labor government is the emissions reduction fund which is the plan of the coalition government to ensure reduced emissions of carbon. The coalition government has been paying $2.55 billion as emission reduction fund that is being paid to the companies are reducing the emission of the greenhouse gasses (Anger, 2008). The plan has been acting as the incentive for making the companies work toward ensuring a reduction in carbon emissions. Besides, the coalition government has developed projects that are aimed at reducing carbon emissions that can include landfill gas for generating energy instead of releasing carbon into the atmosphere.

The key motivations to ETS

ETS is considered as the linking that is most effective because it assists in unlocking the widest options for the mitigations.

ETS is also the most important scenario that can ensure the creation of single carbon price globally and is essential to reducing the many concerns concerning carbon leakage.

If the initial price of carbon is set higher in EU ETS, the Emissions net buyers of NZ ETS do permit a loss. This is because they will be paying more for carbon hence incurring high costs in the process of making the purchases. On the other hand, if the initial price of the carbon is high in EU ETS, the net emission sellers in EU ETS do permit gain. The emissions trading schemes of the greenhouse gasses have been in operations in different countries. The trading in carbon does credit or permit between and within the emissions trading schemes (Böhringer, 2005). The economic value of the trade has been decreasing over the years mainly because of economic activities that are being suppressed. Emissions trading schemes if Australia has been legislated to ensure that it adopts the market price linking to the emissions trading schemes of the European countries. Analysts do predict that the Australian price of carbon credits and permits to easily converge with the prices of the European scheme. This can be attributed to the decreased value in the few previous years major because of oversupply.

References

Anger N (2008) Emissions trading beyond Europe: linking schemes in a post-Kyoto world. Energ Econ 30(4):2028–2049

Böhringer C, Lange A (2005) Economic implications of alternative allocation schemes for emission allowances. Scand J Econ 107(3):563–581

http://documents.worldbank.org/curated/en/636161467995665933/State-and-trends-of-carbon-pricing-2015

https://www.adelphi.de/en/publication/towards-global-price-carbon-pathways-linking-carbon-pricing-instruments