Carbon Pricing

Carbon Pricing

Early Experience and Future Prospects

Edited by John Quiggin, David Adamson and Daniel Quiggin

In 2012, Australia took the major step of introducing a carbon price, involving the creation of a system of emissions permits initially issued at a fixed price. Carbon Pricing brings together experts instrumental in the development, and operation, of Australia’s carbon policy who have played a significant role in the broader debate over climate change policy. Together they have achieved an in-depth analysis of Australia’s policy stance on pricing carbon and its implications for the wider economy.

Chapter 2: Carbon pricing in Australia: an early view from the inside

Daniel Besley, Christian Downie, Steven Kennedy and Simon Writer

Subjects: economics and finance, environmental economics, environment, climate change, environmental economics, environmental politics and policy, valuation, politics and public policy, environmental politics and policy


The period since the start of emissions trading in Australia on 1 July 2012 provides an early opportunity to reflect upon the implementation of the new emissions trading scheme and the policy and administrative considerations that have shaped its design. Australia's emissions trading scheme is the government's central policy for achieving Australia's bipartisan international commitment to reduce emissions by 5 percent by 2020 and the government's commitment to increase this, if international action strengthens. Many years of policy discussion, planning and wide-ranging consultation have contributed to the design of Australia's emissions trading scheme. Its development and implementation have been informed by a comprehensive economic modeling exercise, the use or adaptation of existing administrative infrastructure and systems, and extensive planning and coordination within government. With emissions trading commencing on 1 July 2012 and most of the scheme's administrative arrangements well established, the announcement on 28 August 2012 that the Australian scheme will link with the European Union's Emissions Trading System serves to reinforce its role. The announcement of the link with the European Union (EU) system, which covers 31 countries and is the largest and most mature emissions trading system in the world, having commenced in 2005, was well ahead of expectations and suggests that the Australian scheme's design has been well received internationally.

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