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Australia’s Carbon Pricing Strategies in a Global Context

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  • Clarke, Harry
  • Waschik, Robert
Abstract
The impact of international carbon control measures – and the absence of such measures – on Australian carbon pricing policies are analyzed both at a theoretical and empirical level. While theory and interest group advocacy suggest a potential case for destination accounting of carbon emissions and border tax adjustments and/or export exemptions, this case is sometimes exaggerated. For example, in the ferrous metals sector, empirical analysis suggests that gains from such refinements are low since carbon leakages and adverse competitiveness effects are small. In other sectors – such as non-ferrous metals – the effects are more pronounced. Exaggerating the competitiveness costs of carbon pricing runs the risk of policy overreaction and unintended protectionism, dramatically increasing the costs of Australian carbon pricing policies. Providing free and tradable emission quotas to exporters and import competing sectors is a ‘second best’ policy but one with practicality in sectors where adverse competitiveness effects do need to be addressed.

Suggested Citation

  • Clarke, Harry & Waschik, Robert, 2011. "Australia’s Carbon Pricing Strategies in a Global Context," Working Papers 249535, Australian National University, Centre for Climate Economics & Policy.
    • Handle: RePEc:ags:ancewp:249535
    DOI: 10.22004/ag.econ.249535
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    References listed on IDEAS

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    1. New CCEP Working Papers
      by David Stern in Stochastic Trend on 2011-09-28 14:49:00

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    Cited by:

    1. Mahinda Siriwardana & Sam Meng & Judith McNeill, 2017. "Border adjustments under unilateral carbon pricing: the case of Australian carbon tax," Journal of Economic Structures, Springer;Pan-Pacific Association of Input-Output Studies (PAPAIOS), vol. 6(1), pages 1-21, December.
    2. Sigit Perdana and Rod Tyers, 2020. "Global Climate Change Mitigation: Strategic Incentives," The Energy Journal, International Association for Energy Economics, vol. 0(Number 3), pages 183-206.
    3. Fraser, Iain & Waschik, Robert, 2013. "The Double Dividend hypothesis in a CGE model: Specific factors and the carbon base," Energy Economics, Elsevier, vol. 39(C), pages 283-295.
    4. Harry Clarke & Iain Fraser & Robert George Waschik, 2014. "How Much Abatement Will Australia's Emissions Reduction Fund Buy?," Economic Papers, The Economic Society of Australia, vol. 33(4), pages 315-326, December.
    5. Meng, Xianming & Siriwardana, Mahinda & McNeill, Judith, 2015. "Will the direct action plan work?," Conference papers 332602, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    6. Siriwardana, Mahinda & Meng, Sam & McNeill, Judith, 2013. "Border Adjustments under Unilateral Carbon Pricing: Are they Warranted in the Case of Australian Carbon Tax?," Conference papers 332357, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    7. Svetlana Maslyuk & Dinusha Dharmaratna, 2012. "Impact of Shocks on Australian Coal Mining," Monash Economics Working Papers 37-12, Monash University, Department of Economics.
    8. Meng, Sam & Siriwardana, Mahinda & McNeill, Judith & Nelson, Tim, 2018. "The impact of an ETS on the Australian energy sector: An integrated CGE and electricity modelling approach," Energy Economics, Elsevier, vol. 69(C), pages 213-224.
    9. Waschik, Robert, 2015. "Differentiated products, increasing returns to scale and heterogeneous firms in a CGE model of the Australian coal sector," Energy Economics, Elsevier, vol. 51(C), pages 521-529.

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    More about this item

    Keywords

    Demand and Price Analysis; Resource /Energy Economics and Policy;

    JEL classification:

    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming

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