Reform, Innovation and Renewable Energy
Critical Issues in Environmental Taxation series
Edited by Natalie P. Stoianoff, Larry Kreiser, Bill Butcher, Janet E. Milne and Hope Ashiabor
Chapter 13: Economic instruments in pollution law in New South Wales, Australia: a case for greater use and refinement
The first pollution laws introduced in the 1960s–70s were based on traditional command-and-controlregulation. More flexible and innovative instruments were introduced with reformed pollution laws in the1990s. The centrepiece of NSW’s pollution laws is the Protection of the Environment Operations Act1997 (NSW) (‘POEO Act’). The POEO Act and associated regulations provide the NSW EnvironmentProtection Authority (‘EPA’) with a number of economic tools to address pollution. This includesinstruments such as load-based licensing fees, risk-based licensing fees, tradable emission schemes,green-offset schemes, and monetary benefit orders. Those instruments have been utilized to variableextents. Some instruments such as monetary benefit orders, which require that a defendant pay back anyprofit they have derived from an offence, have not been used at all. Fines, which are offset by any profitsretained by the defendant, provide little, if any, deterrence to potential polluters. Other instruments such as tradable emission schemes have been employed in limited circumstances, namely for specific pollutantsand defined geographical areas. Economic regulatory tools have been received with mixed success and criticism. This chapter considers the extent to which economic instruments have been utilized in NSWpollution law as a regulatory tool that can aid environmental protection. Particular focus is placed on theuse of load-based and risk-based licensing fees, tradable emission schemes and monetary benefit orders. The chapter concludes that while economic instruments have the potential to contribute in an effective wayto the EPA’s regulation of pollution, some instruments seem to have been all but forgotten and othershave a number of potential weaknesses in their design. These factors may be negatively impacting on theEPA’s ability to effectively protect the environment.
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