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The logic of collective action and Australia’s Climate Policy


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  • Pezzey, John C.V.
  • Mazouz, Salim
  • Jotzo, Frank


The Australian Government's Carbon Pollution Reduction Scheme (CPRS), March 2009, set a target of 5 to 15 per cent emission cuts during 2000 and 2020. The proposed target is weak and is likely to increase mitigation costs in Australia in the long run. This research report analyses the target’s efficiency as well as provisions for preventing carbon leakage. The research also looks at the nature of changes to the CPRS made during 2008 as well as the likely cause of these changes. The free allocation of output-linked, tradable permits to Emissions-Intensive, Trade-Exposed (EITE) sectors was much higher than previously proposed and greater than what is needed to prevent carbon leakage. This means EITE emissions could rise by 13 per cent during 2010 and 2020. To meet the proposed national targets, non-EITE sectors must also cut emissions by 34 to 51 per cent (or make equivalent permit imports). This is far from a cost-effective outcome. The weak targets and over-generous EITE assistance illustrate how collective action by the ‘carbon lobby’ can damage economic efficiency. To resist this, new national or international institutions to assess lobby claims impartially are needed. More government publicity about the true economic importance of carbon-intensive sectors is also required. Over-concern that voluntary emission cuts will be nullified by the CPRS is another, different, demonstration of lobby power.

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Bibliographic Info

Paper provided by Australian National University, Environmental Economics Research Hub in its series Research Reports with number 94824.

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Date of creation: May 2009
Date of revision:
Handle: RePEc:ags:eerhrr:94824

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Keywords: climate policy; Australia; targets; emission trading; carbon leakage; lobbying; Environmental Economics and Policy; Resource /Energy Economics and Policy;

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References listed on IDEAS
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  1. John C. V. Pezzey & Frank Jotzo & John Quiggen, 2006. "Fiddling while carbon burns: why climate policy needs pervasive emission pricing as well as technology promotion," Economics and Environment Network Working Papers 0611, Australian National University, Economics and Environment Network.
  2. Weber, Christopher L. & Peters, Glen P., 2009. "Climate change policy and international trade: Policy considerations in the US," Energy Policy, Elsevier, vol. 37(2), pages 432-440, February.
  3. Oikonomou, Vlasis & Patel, Martin & Worrell, Ernst, 2006. "Climate policy: Bucket or drainer?," Energy Policy, Elsevier, vol. 34(18), pages 3656-3668, December.
  4. repec:cup:cbooks:9780521744447 is not listed on IDEAS
  5. Babiker, Mustafa H., 2005. "Climate change policy, market structure, and carbon leakage," Journal of International Economics, Elsevier, vol. 65(2), pages 421-445, March.
  6. Carolyn Fischer & Alan K. Fox, 2007. "Output-Based Allocation of Emissions Permits for Mitigating Tax and Trade Interactions," Land Economics, University of Wisconsin Press, vol. 83(4), pages 575-599.
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Cited by:
  1. Wood, Peter John & Jotzo, Frank, 2009. "Price Floors for Emissions Trading," Research Reports 94885, Australian National University, Environmental Economics Research Hub.
  2. Andrés J. Drew, 2010. "New rules, new politics, same actors – explaining policy change in the EU ETS," Grantham Research Institute on Climate Change and the Environment Working Papers 29, Grantham Research Institute on Climate Change and the Environment.
  3. Pezzey, John C.V. & Jotzo, Frank, 2010. "Tax-Versus-Trading and Free Emission Shares as Issues for Climate Policy Design," Research Reports 95049, Australian National University, Environmental Economics Research Hub.


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