Consumer-based carbon reduction incentives
Australia's ability to meet its commitment to reduce greenhouse gases under the Kyoto convention will probably require at least some government intervention. Traditionally, approaches to reducing pollution in Australia have tended to focus on the adoption of emission standards. Theoretical criticism by environmental economists has, in part, resulted in a movement toward the adoption of market based mechanisms for pollution abatement; and flirtations with carbon taxes and tradeable permits to reduce greenhouse gas emissions. Each instrument is subject to significant weaknesses. Tradeable permits are administratively complex for both polluter and administrator and can lead to production bottlenecks where polluters cannot find requisite permits. A carbon tax is simpler to administer and offers much more flexibility, but can have regressive and inequitable economic impacts. Of these approaches, tradeable permits offer greater potential for achieving set emissions reductions, but tend to be restricted in application to large emitters such as industry. It is argued here that to be truly cost effective, incentives to reduce emissions need to be targeted as close as possible to the point of fuel consumption-and hence greenhouse emission: by both industry and the household consumer. This paper explores the benefits and limitations of adopting a mixed incentive scheme applied to the energy consumer to reduce greenhouse gas emissions. The proposed consumer carbon reduction incentive (CBCRI) incorporates elements of tradeable permits, carbon taxes and emission reduction subsidies.
|Date of creation:||Jul 1998|
|Date of revision:|
|Contact details of provider:|| Web page: http://incres.anu.edu.au/EEP/wp.html|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kling, Catherine L., 1994. "Environmental benefits from marketable discharge permits or an ecological vs. economical perspective on marketable permits," Ecological Economics, Elsevier, vol. 11(1), pages 57-64, September.
- Roberts, Marc J. & Spence, Michael, 1976. "Effluent charges and licenses under uncertainty," Journal of Public Economics, Elsevier, vol. 5(3-4), pages 193-208.
- R. Devlin & R. Grafton, 1994.
"Tradeable permits, missing markets, and technology,"
Environmental & Resource Economics,
European Association of Environmental and Resource Economists, vol. 4(2), pages 171-186, April.
- Devlin, R.A. & Grafton, R.Q., 1993. "Tradeable Permits, Missing Markets, and Technology," Working Papers 9301e, University of Ottawa, Department of Economics.
- Howarth, Richard B. & Winslow, Margrethe A., 1994. "Energy use and CO2 emissions reduction: Integrating pricing and regulatory policies," Energy, Elsevier, vol. 19(8), pages 855-867.
- Robert W. Hahn, 1995. "Choosing among fuels and technologies for cleaning up the air," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 14(4), pages 532-554.
- Moon, Bruce, 1994. "Transport energy in Australia Policy problems, issues and alternatives," Energy Policy, Elsevier, vol. 22(4), pages 331-344, April.
- Helfand Gloria E. & Rubin Jonathan, 1994. "Spreading versus Concentrating Damages: Environmental Policy in the Presence of Nonconvexities," Journal of Environmental Economics and Management, Elsevier, vol. 27(1), pages 84-91, July.
- Atkinson, Scott & Tietenberg, Tom, 1991. "Market failure in incentive-based regulation: The case of emissions trading," Journal of Environmental Economics and Management, Elsevier, vol. 21(1), pages 17-31, July.
- Tietenberg, T H, 1990. "Economic Instruments for Environmental Regulation," Oxford Review of Economic Policy, Oxford University Press, vol. 6(1), pages 17-33, Spring.
- Paul Koutstaal & Andries Nentjes, 1995. "Tradable Carbon Permits in Europe: Feasibility and Comparison with Taxes," Journal of Common Market Studies, Wiley Blackwell, vol. 33(2), pages 219-233, 06.
When requesting a correction, please mention this item's handle: RePEc:anu:wpieep:9805. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jack Pezzey)
If references are entirely missing, you can add them using this form.