The Carbon Pollution Reduction Scheme is Australia's plan to reduce carbon emissions and mitigate climate change. It aims to reduce Australia's emissions by 60% by 2050 through a cap-and-trade system. The scheme would cover 75% of Australia's national emissions and require the largest 1000 polluting firms to buy permits to emit carbon. It aims to reduce emissions in a cost-effective way while providing assistance to households, businesses, workers and regions most affected.

1. Carbon Pollution Reduction Scheme (Australia) Lily Mu & Christina Wu Econ HL

2. Background Info Australia  hottest and driest continents on earth Climate Change Food production Water supplies Great Barrier Reef Tourism Industry and environmental challenges facing Australia and the rest of the world.

3. Science Behind Carbon Pollution Carbon pollution  climate change Higher temp, droughts, extreme weathe r Human activity  greenhouse gas increase  rise in global mean temperature

5. Green Paper

6. White Paper

7. Strategy and Aims Mitigation Reduce Australia’s greenhouse gas emissions 60% emissions reduction (2050) Adaptation Adapt to climate change that cannot be avoided International engagement Achieve low carbon economy Households and business assistance  adjust to carbon price Ensure scheme achieves its central objectives Use every cent raised to assist households and business

8. Scheme Coverage 75% national emissions 1000 firms 6 Kyoto gases

10. Stakeholders

11. Commitments to Households Increase payments to low-income households, pensioner, senior Provide assistance to middle income households

12. Assistance to Business and Workers Climate Change Action Fund Investment in new low-emissions technologies spread of innovation and environment-friendly practices among small/medium sized businesses Provide assistance to regional workers

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

14. What is the Market Failure? Carbon pollution Too much produced at too low of a price No cost

15. What is the proposed remedy? “ Carbon pollution reduction scheme” Cap-and-trade system of emissions trading for greenhouse gases. A central authority sets a limit/cap on amount of a pollutant that can be emitted. Introduce in Australia in 2010 as part of its climate change policy

16. Green Paper Objectives: Meet Australia’s emissions reduction targets in most flexible & cost-effective way Support an effective global response to climate change Provide for transitional assistance for the most affected households and firms

17. How does it work? Buy a 'pollution permit' for each tonne of carbon they contribute to atmosphere. Concentrate on biggest polluters : Around 1000 Australian companies that produce more than 25000 tonnes of carbon pollution each year. 99% of all firms in Australia will not need to purchase permits for their emissions.

18. Cap Limit on greenhouse gas emissions Creates a price for carbon & ability to trade assures that emissions are reduced at lowest possible price. Must be consistent with longer term goals of reducing Australia’s emissions by 60% compared with 2000 levels by 2050

19. Trade Price of permits will be determined by market. By trading amongst themselves, firms achieve scheme cap at least cost to economy.

20. White Paper Government's targets for Greenhouse gas emission reductions 5% below 2000 by 2020 on a one-sided basis or up to 15% below 2000 by 2020 if also agreed by other major emitters Indicative national emissions path for first few years of scheme: In 2010-11, 109% of 2000 levels In 2011-12, 108% of 2000 levels In 2012-13, 107% of 2000 levels

21. Does it internalize the externality? Yes Best way to reduce carbon pollution while minimizing impact on business & households.

22. Citation Department of Climate Change. &quot;Australian Government.&quot; Carbon Pollution Reduction Scheme. 13 Mar. 2009. Australian Government of Climate Change. 14 Mar 2009 <http://www.climatechange.gov.au/greenpaper/index.html>. &quot;Carbon Pollution Reduction Scheme.&quot; Wikipedia. USA: Wikimedia Foundation, Inc, 2009. . &quot;Wikipedia.&quot; Carbon Pollution Reduction Scheme. 12 Mar. 2009. Wikimedia Foundation. Inc. 11 Mar. 2009 <http://en.wikipedia.org/wiki/Carbon_Pollution_Reduction_Scheme>. Socha, Tom. &quot;Air Pollution Causes and Effects .&quot; Health and Energy. 09 Nov. 2007. . 11 Mar. 2009 <http://healthandenergy.com/air_pollution_causes.htm>.