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The logic of collective action and Australia's climate policy

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

Abstract

We analyse the long-term efficiency of the emissions target and of the provisions to reduce carbon leakage in the Australian Government's Carbon Pollution Reduction Scheme, as proposed in March 2009, and the nature and likely cause of changes to these features in the previous year. The target range of 5-15 per cent cuts in national emission entitlements during 2000-2020 was weak, in that on balance it is too low to minimise Australia's long-term mitigation costs. The free allocation of output-linked, tradable emissions permits to emissions-intensive, trade-exposed (EITE) sectors was much higher than proposed earlier, or shown to be needed to deal with carbon leakage. It plausibly means that EITE emissions can rise by 13 per cent during 2010-2020, while non-EITE sectors must cut emissions by 34-51 per cent (or make equivalent permit imports) to meet the national targets proposed, far from a cost-effective outcome. The weak targets and excessive EITE assistance illustrate the efficiency-damaging power of collective action by the 'carbon lobby'. Resisting this requires new national or international institutions to assess lobby claims impartially, and more government publicity about the true economic importance of carbon-intensive sectors. Copyright 2010 The Authors. Journal compilation 2010 Australian Agricultural and Resource Economics Society Inc. and Blackwell Publishing Asia Pty Ltd.

Suggested Citation

  • John C.V. Pezzey & Salim Mazouz & Frank Jotzo, 2010. "The logic of collective action and Australia's climate policy ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), pages 185-202, April.
  • Handle: RePEc:bla:ajarec:v:54:y:2010:i:2:p:185-202
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    References listed on IDEAS

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    Cited by:

    1. Andr�s J. Drew, 2010. "New rules, new politics, same actors � explaining policy change in the EU ETS," GRI Working Papers 29, Grantham Research Institute on Climate Change and the Environment.
    2. Wood, Peter John & Jotzo, Frank, 2011. "Price floors for emissions trading," Energy Policy, Elsevier, vol. 39(3), pages 1746-1753, March.
    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.
    4. Franco, Daniel, 2012. "Beni comuni, beni pubblici e risorse ambientali: il ruolo dell’azione collettiva
      [Public goods, common goods and natural resources: the role of the collective action]
      ," MPRA Paper 52357, University Library of Munich, Germany, revised Mar 2012.
    5. Cheung, Grace & Davies, Peter J., 2017. "In the transformation of energy systems: what is holding Australia back?," Energy Policy, Elsevier, vol. 109(C), pages 96-108.

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