Study into emission reduction policies in key economies

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 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.