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The governance challenge for implementing effective market-based climate policies: A case study of The New South Wales Greenhouse Gas Reduction Scheme

  • Passey, Robert
  • MacGill, Iain
  • Outhred, Hugh
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    The New South Wales (NSW) Greenhouse Gas Reduction Scheme (GGAS) in Australia is a baseline and credit emissions trading scheme with the stated aim of reducing the per-capita greenhouse emissions associated with electricity consumption in the state of NSW. Here we provide a detailed assessment of the GGAS design and operation, with a particular emphasis on its effectiveness in delivering physical emissions reductions that would not have occurred in its absence. We find that a number of design features mean a significant proportion of the tradeable 'abatement' certificates are unlikely to correspond to the claimed emissions reductions. While some of these adverse design choices might be corrected, others would seem inherent to the underlying scheme design. Our analysis highlights the major governance challenges with emissions trading approaches and hence the importance of good policy implementation processes including the need for separation of powers through a scheme development process that involves design, assessment and revision. These GGAS lessons would seem relevant for governance with all emissions trading schemes, and has particular implications for cap and trade schemes that incorporate baseline and credit offset schemes, as well as to the 'White Certificate' schemes increasingly being seen as a means of fostering enhanced end-use energy efficiency.

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    File URL: http://www.sciencedirect.com/science/article/B6V2W-4SN92MC-5/1/9f38a07f26898c23b7bd7cd7950be082
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    Article provided by Elsevier in its journal Energy Policy.

    Volume (Year): 36 (2008)
    Issue (Month): 8 (August)
    Pages: 2999-3008

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    Handle: RePEc:eee:enepol:v:36:y:2008:i:8:p:2999-3008
    Contact details of provider: Web page: http://www.elsevier.com/locate/enpol

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    1. Fischer, Carolyn, 2004. "Project-Based Mechanisms for Emissions Reductions: Balancing Trade-offs with Baselines," Discussion Papers dp-04-32, Resources For the Future.
    2. Neil J. Buckley & S. Mestelman & Andrew Muller, 2004. "Implications of Alternative Emission Trading Plans: Experimental Evidence," Department of Economics Working Papers 2004-07, McMaster University.
    3. Langniss, Ole & Praetorius, Barbara, 2006. "How much market do market-based instruments create? An analysis for the case of "white" certificates," Energy Policy, Elsevier, vol. 34(2), pages 200-211, January.
    4. Bertoldi, Paolo & Huld, Thomas, 2006. "Tradable certificates for renewable electricity and energy savings," Energy Policy, Elsevier, vol. 34(2), pages 212-222, January.
    5. Oikonomou, Vlasis & Rietbergen, Martijn & Patel, Martin, 2007. "An ex-ante evaluation of a White Certificates scheme in The Netherlands: A case study for the household sector," Energy Policy, Elsevier, vol. 35(2), pages 1147-1163, February.
    6. Mundaca, Luis, 2007. "Transaction costs of Tradable White Certificate schemes: The Energy Efficiency Commitment as case study," Energy Policy, Elsevier, vol. 35(8), pages 4340-4354, August.
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