Carbon Pollution Australia


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Carbon Pollution Australia

  1. 1. Carbon Pollution Reduction Scheme (Australia) Lily Mu & Christina Wu Econ HL
  2. 2. Background Info <ul><li>Australia  hottest and driest continents on earth </li></ul><ul><li>Climate Change </li></ul><ul><ul><li>Food production </li></ul></ul><ul><ul><li>Water supplies </li></ul></ul><ul><ul><li>Great Barrier Reef </li></ul></ul><ul><ul><li>Tourism Industry and environmental challenges facing Australia and the rest of the world. </li></ul></ul>
  3. 3. Science Behind Carbon Pollution <ul><li>Carbon pollution  climate change </li></ul><ul><ul><li>Higher temp, droughts, extreme weathe r </li></ul></ul><ul><ul><li>Human activity  greenhouse gas increase  rise in global mean temperature </li></ul></ul>
  4. 5. Green Paper
  5. 6. White Paper
  6. 7. Strategy and Aims <ul><li>Mitigation </li></ul><ul><ul><li>Reduce Australia’s greenhouse gas emissions </li></ul></ul><ul><ul><li>60% emissions reduction (2050) </li></ul></ul><ul><li>Adaptation </li></ul><ul><ul><li>Adapt to climate change that cannot be avoided </li></ul></ul><ul><li>International engagement </li></ul><ul><li>Achieve low carbon economy </li></ul><ul><li>Households and business assistance  </li></ul><ul><ul><li>adjust to carbon price </li></ul></ul><ul><ul><li>Ensure scheme achieves its central objectives </li></ul></ul><ul><ul><li>Use every cent raised to assist households and business </li></ul></ul>
  7. 8. Scheme Coverage <ul><li>75% national emissions </li></ul><ul><li>1000 firms </li></ul><ul><li>6 Kyoto gases </li></ul>
  8. 10. Stakeholders
  9. 11. Commitments to Households <ul><li>Increase payments to low-income households, pensioner, senior </li></ul><ul><li>Provide assistance to middle income households </li></ul>
  10. 12. Assistance to Business and Workers <ul><li>Climate Change Action Fund </li></ul><ul><li>Investment in new low-emissions technologies </li></ul><ul><li>spread of innovation and environment-friendly practices among small/medium sized businesses </li></ul><ul><li>Provide assistance to regional workers </li></ul>
  11. 13. Model – Negative Externality (S)MPC (D)MPB Pp Qp (S)MSC tax Pso Qso Pt (D)MSB Quantity Price Qt Increase in Price Decrease in Quantity
  12. 14. What is the Market Failure? <ul><li>Carbon pollution </li></ul><ul><ul><li>Too much produced at too low of a price </li></ul></ul><ul><ul><li>No cost </li></ul></ul>
  13. 15. What is the proposed remedy? <ul><li>“ Carbon pollution reduction scheme” </li></ul><ul><ul><li>Cap-and-trade system of emissions trading for greenhouse gases. </li></ul></ul><ul><ul><li>A central authority sets a limit/cap on amount of a pollutant that can be emitted. </li></ul></ul><ul><ul><ul><li>Introduce in Australia in 2010 as part of its climate change policy </li></ul></ul></ul>
  14. 16. Green Paper <ul><li>Objectives: </li></ul><ul><ul><li>Meet Australia’s emissions reduction targets in most flexible & cost-effective way </li></ul></ul><ul><ul><li>Support an effective global response to climate change </li></ul></ul><ul><ul><li>Provide for transitional assistance for the most affected households and firms </li></ul></ul>
  15. 17. How does it work? <ul><li>Buy a 'pollution permit' for each tonne of carbon they contribute to atmosphere. </li></ul><ul><li>Concentrate on biggest polluters : Around 1000 Australian companies that produce more than 25000 tonnes of carbon pollution each year. </li></ul><ul><li>99% of all firms in Australia will not need to purchase permits for their emissions. </li></ul>
  16. 18. Cap <ul><li>Limit on greenhouse gas emissions </li></ul><ul><ul><li>Creates a price for carbon & ability to trade assures that emissions are reduced at lowest possible price. </li></ul></ul><ul><li>Must be consistent with longer term goals of reducing Australia’s emissions by 60% compared with 2000 levels by 2050 </li></ul>
  17. 19. Trade <ul><li>Price of permits will be determined by market. </li></ul><ul><li>By trading amongst themselves, firms achieve scheme cap at least cost to economy. </li></ul>
  18. 20. White Paper <ul><li>Government's targets for Greenhouse gas emission reductions </li></ul><ul><ul><li>5% below 2000 by 2020 on a one-sided basis or </li></ul></ul><ul><ul><li>up to 15% below 2000 by 2020 if also agreed by other major emitters </li></ul></ul><ul><li>Indicative national emissions path for first few years of scheme: </li></ul><ul><ul><li>In 2010-11, 109% of 2000 levels </li></ul></ul><ul><ul><li>In 2011-12, 108% of 2000 levels </li></ul></ul><ul><ul><li>In 2012-13, 107% of 2000 levels </li></ul></ul>
  19. 21. Does it internalize the externality? <ul><li>Yes </li></ul><ul><ul><li>Best way to reduce carbon pollution while minimizing impact on business & households. </li></ul></ul>
  20. 22. Citation <ul><li>Department of Climate Change. &quot;Australian Government.&quot; Carbon Pollution Reduction Scheme. 13 Mar. 2009. Australian Government of Climate Change. 14 Mar 2009 <>. </li></ul><ul><li>&quot;Carbon Pollution Reduction Scheme.&quot; Wikipedia. USA: Wikimedia Foundation, Inc, 2009. </li></ul><ul><li>. &quot;Wikipedia.&quot; Carbon Pollution Reduction Scheme. 12 Mar. 2009. Wikimedia Foundation. Inc. 11 Mar. 2009 <>. </li></ul><ul><li>Socha, Tom. &quot;Air Pollution Causes and Effects .&quot; Health and Energy. 09 Nov. 2007. . 11 Mar. 2009 <>. </li></ul>