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 7: Modeling the impact of the Australian greenhouse emissions trading scheme on farm and fishery businesses

Mick Keogh

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 Australian government has introduced a greenhouse emissions trading scheme (ETS) that has imposed a price on the greenhouse gas emissions produced by some Australian businesses from 1 July 2012. The ETS is initially operating with a government fixed carbon price commencing at AU$23 per metric ton CO2 e in 2012-13, and rising by 5 percent per annum until a market based trading scheme commences in 2015. (Please note, all currency figures in this chapter are in Australian dollars.) From 2015, the carbon price will be set by the market, and will be linked to international carbon schemes such as those operating in New Zealand and the European Union (EU). While these international carbon markets are currently trading at prices considerably below the Australian carbon price, the Australian government has stated it anticipates carbon prices to have increased by that time, and will follow a forward price trend largely in line with Treasury projections, which is for a long term annual increase of between 4 and 5 percent per annum. The government has announced that direct emissions from agricultural activities will not incur a cost under the ETS for the foreseeable future, although the possibility of imposing a cost on agricultural emissions at some future time has not been completely ruled out, and has been proposed by a number of prominent persons and groups involved in advising on carbon policy.

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