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Australia's Carbon Pricing Strategies in a Global Context

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  • HARRY CLARKE
  • ROBERT WASCHIK

Abstract

The impact of international carbon control measures - and the absence of such measures - on Australian carbon pricing policies are analyzed both at a theoretical and empirical level. While theory and interest group advocacy suggest a potential case for destination accounting of carbon emissions and border tax adjustments and/or export exemptions, this case is sometimes exaggerated. For example, in the ferrous metals sector, empirical analysis suggests that gains from such refinements are low since carbon leakages and adverse competitiveness effects are small. In other sectors - such as non-ferrous metals - the effects are more pronounced. Exaggerating the competitiveness costs of carbon pricing runs the risk of policy overreaction and unintended protectionism, dramatically increasing the costs of Australian carbon pricing policies. Providing free and tradable emission quotas to exporters and import competing sectors is a 'second best' policy but one with practicality in sectors where adverse competitiveness effects do need to be addressed.

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File URL: http://hdl.handle.net/10.1111/j.1475-4932.2012.00798.x
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Bibliographic Info

Article provided by The Economic Society of Australia in its journal The Economic Record.

Volume (Year): 88 (2012)
Issue (Month): s1 (06)
Pages: 22-37

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Handle: RePEc:bla:ecorec:v:88:y:2012:i:s1:p:22-37

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  1. New CCEP Working Papers
    by David Stern in Stochastic Trend on 2011-09-28 09:49:00
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Cited by:
  1. Svetlana Maslyuk & Dinusha Dharmaratna, 2012. "Impact of Shocks on Australian Coal Mining," Development Research Unit Working Paper Series 37-12, Monash University, Department of Economics.

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