The logic of collective action and Australia's climate policy

John C. V. Pezzey, Salim Mazouz, Frank Jotzo

Research output: Contribution to journalArticle

11 Citations (Scopus)

Abstract

We analyse the long-term efficiency of the emissions target and of the provisions to reduce carbon leakage in the Australian Government's Carbon Pollution Reduction Scheme, as proposed in March 2009, and the nature and likely cause of changes to these features in the previous year. The target range of 5-15 per cent cuts in national emission entitlements during 2000-2020 was weak, in that on balance it is too low to minimise Australia's long-term mitigation costs. The free allocation of output-linked, tradable emissions permits to emissions-intensive, trade-exposed (EITE) sectors was much higher than proposed earlier, or shown to be needed to deal with carbon leakage. It plausibly means that EITE emissions can rise by 13 per cent during 2010-2020, while non-EITE sectors must cut emissions by 34-51 per cent (or make equivalent permit imports) to meet the national targets proposed, far from a cost-effective outcome. The weak targets and excessive EITE assistance illustrate the efficiency-damaging power of collective action by the 'carbon lobby'. Resisting this requires new national or international institutions to assess lobby claims impartially, and more government publicity about the true economic importance of carbon-intensive sectors.
Original languageEnglish
Pages (from-to)185-202
Number of pages18
JournalAustralian Journal of Agricultural and Resource Economics
Volume54
Issue number2
DOIs
Publication statusPublished - Apr 2010

Keywords

  • lobbying
  • climate policy
  • Australia
  • carbon leakage
  • targets
  • emission trading

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