Green Fiscal Reform for a Sustainable Future
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Green Fiscal Reform for a Sustainable Future

Reform, Innovation and Renewable Energy

Edited by Natalie P. Stoianoff, Larry Kreiser, Bill Butcher, Janet E. Milne and Hope Ashiabor

This timely book focuses on achieving a sustainable future through the reform of green fiscal policy. Green fiscal policies help not only provide the needed financing but may also serve the Sustainable Development Goals adopted by the United Nations in 2015. In this volume environmental tax experts review the development of fiscal carbon policy, consider the impact of green taxation on trade and competition, analyse the lessons learned from national experiences with fuel and energy pricing, and evaluate a variety of green economic instruments.
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Chapter 12: The Australian Renewable Energy Target scheme: a case study of the impact of uncertainty on a market-based mechanism

David Leary


A wide range of policy options, including a range of market-based mechanisms are available to governments to support the development of renewable energy. These options include provision of investment incentives such as grant programmes, tax measures such as investment and production tax credits, government procurement policies, and guaranteed price systems such as feed-in tariffs. More common mechanisms include various market-based schemes built around obligations to purchase renewable energy, including portfolio standard or quota systems, and a binding renewable energy target. All of these options are present in some form or other in various government responses to climate change and in efforts to promote the development of renewable energy across Australia. By far the most important of these mechanisms has been the Mandatory Renewable Energy Target (MRET) scheme established under the Renewable Energy (Electricity) Act 2000 (Cth). This scheme was originally established to spur investment in renewable energy generation in Australia. This chapter argues that this core policy objective has been undermined by a constant stream of government-sponsored inquiries, reviews and legislative amendments that have created uncertainty and undermined investor confidence in the renewable energy industry. This chapter argues that the Australian experience demonstrates a fundamental lesson that the best way to destroy, or at a minimum undermine, the effectiveness of a market-based mechanism is to create a continual climate of uncertainty through inquiries and reviews and numerous amendments to the scheme.

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