Emissions trading - has it worked?

• Leslie Nielson
• Parliamentary Library

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21 September 2009Emissions trading gets a lot of bad press. James Hansen, a leading advocate for climate change legislation, has rejected emissions trading altogether in favour of a carbon tax. In an open letter delivered on 29 December 2008 to then President-Elect Obama, Dr Hansen described cap-and-trade schemes as ‘ineffectual and not commensurate with the climate threat’. He is not alone in expressing doubts about whether emissions trading is an effective approach to reducing the amount of greenhouse gases (GHG) in the atmosphere.

The proposed Australian Carbon Pollution Reduction Scheme (CPRS) is a 'cap-and-trade' style emissions trading scheme. The legislation required to implement this approach is to be reconsidered by the Australian Senate during November 2009, following its failure to pass through that chamber on 13 August 2009. Before implementing this type of scheme, it is important to understand whether this approach has been successful in reducing GHG emissions in areas where it has been implemented.