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Linking the Australian Emissions Trading Scheme

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  • Jotzo, Frank
  • Betz, Regina

Abstract

A detailed proposal for an economy-wide emissions trading scheme in Australia was tabled by the government in December 2008 with a proposed start date for mid-2010. The government proposes unilateral linking, with no initial bilateral linkages, through the clean development mechanism and joint implementation. The proposal has resulted in serious concern about significant permit price increases and price capping, leading to a ban on permit sales. This research paper evaluates the proposed Australian scheme in relation to international emissions trading and linkages. Different scenarios for the Australian permit price under unilateral linking are considered. Options for bilateral linking with the European Union and New Zealand schemes are also evaluated, including access to ‘hot air’ units. The research paper argues that Australia needs to dismantle linking obstacles, such as the price cap, and move towards suitable bilateral linking schemes.

Suggested Citation

  • Jotzo, Frank & Betz, Regina, 2009. "Linking the Australian Emissions Trading Scheme," Research Reports 94814, Australian National University, Environmental Economics Research Hub.
    • Handle: RePEc:ags:eerhrr:94814
    DOI: 10.22004/ag.econ.94814
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    References listed on IDEAS

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    1. Alexeeva-Talebi, Victoria & Anger, Niels, 2007. "Developing Supra-European Emissions Trading Schemes: An Efficiency and International Trade Analysis," ZEW Discussion Papers 07-038, ZEW - Leibniz Centre for European Economic Research.
    2. Anger, Niels, 2008. "Emissions trading beyond Europe: Linking schemes in a post-Kyoto world," Energy Economics, Elsevier, vol. 30(4), pages 2028-2049, July.
    3. Martin L. Weitzman, 1974. "Prices vs. Quantities," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 41(4), pages 477-491.
    4. Garnaut,Ross, 2008. "The Garnaut Climate Change Review," Cambridge Books, Cambridge University Press, number 9780521744447, January.
    5. Christoph Böhringer & Ulf Moslener & Bodo Sturm, 2007. "Hot air for sale: a quantitative assessment of Russia’s near-term climate policy options," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 38(4), pages 545-572, December.
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Carbon price floor axed, but EU market links a good substitute
      by Frank Jotzo, Director, Centre for Climate Economics and Policy at Australian National University in The Conversation on 2012-08-28 10:33:27

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    Cited by:

    1. Bernard Caillaud & Gabrielle Demange, 2017. "Joint Design of Emission Tax and Trading Systems," Annals of Economics and Statistics, GENES, issue 127, pages 163-201.
    2. Frank Jotzo & Regina Betz, 2009. "Australia's emissions trading scheme: opportunities and obstacles for linking," Climate Policy, Taylor & Francis Journals, vol. 9(4), pages 402-414, July.
    3. Robert W. Hahn & Robert N. Stavins, 2011. "The Effect of Allowance Allocations on Cap-and-Trade System Performance," Journal of Law and Economics, University of Chicago Press, vol. 54(S4), pages 267-294.
    4. Regina Betz & Stefan Seifert & Peter Cramton & Suzi Kerr, 2010. "Auctioning greenhouse gas emissions permits in Australia ," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 54(2), pages 219-238, April.
    5. Peter Zaman & Adam Hedley, 2016. "Networked Carbon Markets," World Bank Publications - Reports 26430, The World Bank Group.
    6. Christian Flachsland & Robert Marschinski & Ottmar Edenhofer, 2009. "To link or not to link: benefits and disadvantages of linking cap-and-trade systems," Climate Policy, Taylor & Francis Journals, vol. 9(4), pages 358-372, July.
    7. Peter Lawrence, 2009. "Australian climate policy and the Asia Pacific partnership on clean development and climate (APP). From Howard to Rudd: continuity or change?," International Environmental Agreements: Politics, Law and Economics, Springer, vol. 9(3), pages 281-299, August.
    8. Massetti, Emanuele & Tavoni, Massimo, 2012. "A developing Asia emission trading scheme (Asia ETS)," Energy Economics, Elsevier, vol. 34(S3), pages 436-443.

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