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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

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  • Passey, Robert
  • MacGill, Iain
  • Outhred, Hugh

Abstract

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.

Suggested Citation

  • Passey, Robert & MacGill, Iain & Outhred, Hugh, 2008. "The governance challenge for implementing effective market-based climate policies: A case study of The New South Wales Greenhouse Gas Reduction Scheme," Energy Policy, Elsevier, vol. 36(8), pages 2999-3008, August.
  • Handle: RePEc:eee:enepol:v:36:y:2008:i:8:p:2999-3008
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    References listed on IDEAS

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    1. 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.
    2. Regina Betz & Misato Sato, 2006. "Emissions trading: lessons learnt from the 1st phase of the EU ETS and prospects for the 2nd phase," Climate Policy, Taylor & Francis Journals, vol. 6(4), pages 351-359, July.
    3. Bertoldi, Paolo & Huld, Thomas, 2006. "Tradable certificates for renewable electricity and energy savings," Energy Policy, Elsevier, vol. 34(2), pages 212-222, January.
    4. NeilJ. Buckley & Stuart Mestelman & R.Andrew Muller, 2006. "Implications Of Alternative Emission Trading Plans: Experimental Evidence," Pacific Economic Review, Wiley Blackwell, vol. 11(2), pages 149-166, June.
    5. 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.
    6. Fischer, Carolyn, 2005. "Project-based mechanisms for emissions reductions: balancing trade-offs with baselines," Energy Policy, Elsevier, vol. 33(14), pages 1807-1823, September.
    7. 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.
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    Cited by:

    1. Passey, Robert & Bailey, Ian & Twomey, Paul & MacGill, Iain, 2012. "The inevitability of ‘flotilla policies’ as complements or alternatives to flagship emissions trading schemes," Energy Policy, Elsevier, vol. 48(C), pages 551-561.
    2. Spash, Clive L., 2009. "The Brave New World of Carbon Trading," MPRA Paper 19114, University Library of Munich, Germany.
    3. Paul J. Burke, 2016. "Undermined by Adverse Selection: Australia's Direct Action Abatement Subsidies," Economic Papers, The Economic Society of Australia, vol. 35(3), pages 216-229, September.
    4. repec:eee:appene:v:205:y:2017:i:c:p:1512-1527 is not listed on IDEAS
    5. Neil J. Buckley & Stuart Mestelman & R. Andrew Muller, 2014. "Production Capacity and Abatement Technology Strategies in Emissions Trading Markets," Department of Economics Working Papers 2014-16, McMaster University.
    6. Andrew Reeson, 2009. "Carbon Markets and their Implications for Natural Resource Management in Australia," Socio-Economics and the Environment in Discussion (SEED) Working Paper Series 2009-09, CSIRO Sustainable Ecosystems.

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