Answer

Climate Change Economics and Policy

Q1.      Several strategies have been implemented by the government and coalition in Australia to try and curb greenhouse gas emissions in the country. That is to say, both the Labor Government’s carbon tax policy and Coalition’s direct Action plan, support the initiative to reduce emissions by five percent below 2000 levels, by 2020 (Hepburn, 2017). On the other hand, both bodies disagree on the mechanisms to be used in achieving this objective. In other words, under the labor government’s carbon tax policy, companies are penalized based on their level of pollution (Kossoy, 2012). In contrast, the Coalition intends to fund businesses through tenders to undertake emission reduction activities.

Diagram showing Carbon Pricing Instruments in Operation or Scheduled for Implementation

Figure 1 and 2: Carbon Pricing Instruments

Q2a.    There various factors that influence the linking of emission trading schemes. For instance, it levels the playing field for businesses and makes mitigation more cost effective.  In this regard, linking carbon pricing systems is a significant element in connecting fragmented policy efforts, in a market that is trending towards a bottom-up climate regime (Kossoy, 2012). Moreover, it aids in harmonizing carbon prices.

1. Emission Trading Schemes (ETS) ensure that organizations are charged for each tone of emission they produce through permits. In this case, a higher price in carbon in the EU ETS will lead to an increase in the cost of permits. As a result, the NZ ETS net buyers of emission permits will lose due to increased expenses, whereas, the EU ETS net sellers will gain (Hepburn, 2017).