Why The Carbon Price Will Have A Limited Impact In Reducing Electricity Emissions
The Australian Government’s recently announced carbon pricing scheme – based on a cap and trade system – has divided the main political parties and the community. The looming federal election (scheduled for 7 September 2013) will again be largely fought over which party has the best policy for meeting Australia’s 2020 greenhouse gas reduction target (which has bipartisan political support for 5% reductions below 2000 levels).
Much of the policy debate in Australia has supported a cap and trade scheme – seen as necessary (and some believe sufficient) to achieve Australia’s emission reductions target.
The debate needs to consider the likely effectiveness of the Australian Government’s carbon pricing scheme in terms of its contribution towards reducing greenhouse gas emissions given current policy and market settings. This paper examines this issue, particularly in light of changed market and policy conditions.