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Australian Study of Emission and Energy-Reduction Policies for the Introduction of Carbon Pricing Undertaken

Canberra, ACT (News4us.com) November 15, 2010

Carbon Pricing 2 Australian Study of Emission and Energy Reduction Policies for the Introduction of Carbon Pricing Undertaken

Australian Study of Emission and Energy-Reduction Policies for the Introduction of Carbon Pricing Undertaken

The Productivity Commission will undertake a study of emission and energy-reduction policies in key international economies to help inform the Government’s plan to introduce a carbon price in Australia, the Federal Government has announced.

The study will determine the effective carbon price of a range of policies including carbon taxes and emissions trading schemes as well as those where the price is less transparent, such as renewable energy targets and subsidies for low-emission technologies.

“Every policy to reduce carbon pollution puts an effective price on carbon, even if that price isn’t immediately obvious,” the Deputy Prime Minister and Treasurer, Wayne Swan, said.

“Countries around the world are taking action to reduce carbon pollution and an open trading nation like Australia can’t afford to be left behind. Australia needs to get started on introducing a carbon price to our economy.”

The Minister for Climate Change and Energy Efficiency, Greg Combet, said: “The Productivity Commission will determine the effective carbon price already adopted or planned by other nations including the United Kingdom, the United States, Germany, New Zealand, China, India, Japan and South Korea.

“It will establish the effective carbon price in those countries by examining the cost of action being taken or planned.

“It will also help to demonstrate the level of action that is already being taken by other countries around the world.”

The Assistant Treasurer, Bill Shorten said: “The Productivity Commission will consult with the business sector, government agencies and other interested parties and draw on evidence, including local research expertise in the economies being examined. It will report to the Government by the end of May 2011.

The Commission will:

  • examine and detail carbon pollution reduction policies;
  • estimate the effective carbon price per tonne of carbon emissions faced by the electricity; generation sectors in these economies and selected industries in manufacturing and transport; and
  • report on the methodology, assumptions and data sources used.

The Productivity Commission will report to the Government by the end of May 2011.

The study is part of the agreement struck with the Member for New England, Tony Windsor, following this year’s Federal Election. Funding of $2.6 million for the study was included in the forward estimates for the 2010-11 Mid-Year Economic and Fiscal Outlook (MYEFO). The study was not announced in MYEFO as the terms of reference had not been approved at that time.

Terms of reference for Productivity Commission Study

Study into emissions reduction policies in key economics

The Productivity Commission is requested to undertake a study on the effective carbon prices that result from emissions and energy reduction policies in place or committed in Australia and other key economies.

This work is intended to provide accurate and timely information on the extent of climate action in key economies and sectors.

Context

Reducing greenhouse gas emissions to mitigate the worst effects of climate change is a global challenge. Various mitigation policies are available, though not all impose explicit carbon prices on businesses and households. While some policies such as carbon taxes or emissions trading schemes will involve explicit carbon prices others, such as direct regulation of technologies, renewable energy targets, or subsidies for low emissions technology, impose less transparent carbon prices.

Given this, comparing the impact of different policies on a given sector across economies can be difficult as their scope can vary considerably and their impacts are not always clear. In this context it is important to develop a methodology for aggregating sectoral impacts across policies, and for making comparisons across key economies.

Against this background, the Commission is requested to provide advice on the effective carbon prices that result from emissions reduction and other relevant policies in key economies, where effective carbon prices include both explicit carbon prices, such as taxes or emissions trading schemes, and implicit carbon prices.

Scope of the Study

The Commission is requested to:

  • examine and detail emissions reduction policies, either in place or committed in Australia and in other key economies such as the UK, the USA, Germany, New Zealand, China, India, Japan and South Korea;
  • estimate the effective carbon price per tonne of CO2-e faced by the electricity generation sectors in these economies, and selected industries drawn from manufacturing and transport sectors in these and other countries where relevant and data permitting;
  • report on the methodology, assumptions and data sources used, so as to inform further analysis in this area.

Key Considerations

In conducting the study and making recommendations the Commission would:

  • consult with the business sector, government agencies and other interested parties as appropriate in Australia and internationally;
  • draw on credible evidence both nationally and internationally, including by utilising local research expertise in economies being examined.

The Commission is to report to the Government by the end of May 2011. The report will be published.


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