Fiscal responses to climate change in Australia: a comparison with California

Dabner, Justin (2016) Fiscal responses to climate change in Australia: a comparison with California. Australian Tax Forum, 31. pp. 131-166.

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Global initiatives to reduce emissions can be categorised as either regulatory measures or measures that seek to place a price on carbon. Most jurisdictions employ a combination of the two with pricing measures generally preferred by economists. Where carbon is priced this is typically achieved by imposing a carbon tax and/or an emissions trading scheme ("ETS"). Australia introduced a nationwide ETS from 1 July 2012 with California (and Quebec) following suit from 1 January 2103. The Australian ETS was set to link with that of the European Union from 1 July 2014 and linage with New Zealand was also being explored. Meanwhile California and Quebec linked 6 months earlier. The first tentative steps towards a truly global ETS seemed to be underway. However political expediency was to see the Australian Opposition rally against the ETS and with its subsequent election to government repeal the regime. The prime mechanism to achieve Australia's emissions reductions commitment is now an emissions reduction fund ("ERF"). Under this scheme the government holds "reverse auctions" whereby the cheapest emissions reduction proposals put to it by industry are funded. Under a "safeguard" measure large emitters are to remain subject to emissions caps with default (possibly) leading to fines where credits cannot be sourced elsewhere. Thus carbon pricing and (limited) trading will still feature under the revised Australian regime. The circumstances leading to the implementation and then demise of the Australian ETS and its replacement with the ERS are explored in this paper. Both the former ETS and ERS will be compared and contrasted with the Californian ETS. It will be observed that a myopic focus on domestic emissions plagues the effectiveness of both the Californian and Australian regimes. Whilst political expediency and, possibly, environmental integrity concerns might motivate this dislike of foreign credits one effect is that emissions reductions are likely to come at a much higher cost and continue to impede the operation of the clean development mechanism, the Kyoto mechanism aimed at reducing the ever expanding developing world emissions.

Item ID: 46329
Item Type: Article (Research - C1)
ISSN: 0812-695X
Keywords: climate change, ETS, Australia, WCI, direct action, emissions reduction fund
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Date Deposited: 15 Nov 2016 04:00
FoR Codes: 48 LAW AND LEGAL STUDIES > 4802 Environmental and resources law > 480202 Climate change law @ 50%
48 LAW AND LEGAL STUDIES > 4801 Commercial law > 480106 Taxation law @ 50%
SEO Codes: 96 ENVIRONMENT > 9603 Climate and Climate Change > 960302 Climate Change Mitigation Strategies @ 100%
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