Comparing carbon policies made easy
Major debate now envelops Federal Parliament on climate change and how Australia will respond to the threat. This is a complex debate with numerous implications for the Australian environment, businesses and individuals. It could also be the ‘trigger’ for new federal elections in 2010.
A Charles Sturt University (CSU) expert on climate change policy, Professor Kevin Parton, has developed a simple comparison between the two policies, both of which aim to reduce greenhouse gases by encouraging new non-polluting technology or sequestrating, or ‘storing’, carbon dioxide.
|Policy mechanism||Increase the price of carbon by charging polluters||Subsidy to those producers who volunteer to introduce non-polluting or carbon-sequestering technology
|What is the encouragement for sustainable new technology?||Disadvantages old carbon polluting technology and hence encourages all new sustainable technology||Guesses what sustainable technology will work and encourages just a few technologies, such as soil carbon storage and tree planting.
|Carbon price||Sets the carbon price and allows market to determine the best type of future technology||Avoids setting carbon price and tries to induce adoption of new technology directly
|Paid for by||Polluters (but eventually price increases for consumers. Also features compensation for less-well-off)||Taxpayers|
|Impact on greenhouse gases (effectiveness)
||Slight at outset, but much scope to reduce greenhouse gases by decreasing the amount of carbon that can be emitted.||Impact slight. Possible large cost to government if the scheme is extended
|Complexity||Complex, but most individuals do not need to know about the detail|| Simple
|Explanation given to date||Poor (eg, few people realise that fewer than 1000 firms are involved and that they collectively produce 75% of greenhouse gases)||Good
|Economic efficiency||In theory the most efficient policy (but it becomes less efficient the more exemptions - eg, free permits - that are allowed)||Less efficient
|Impact on social equity||If compensation is paid to consumers, equity effect is close to neutral||Neutral
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