Learning the hard way: Australian policies to reduce carbon emissions

• John Daley, Tristan Edis
• Grattan Institute

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Image: david.nikonvscanon / flickr

08 April 2011Grattan Institute has released its next energy report, entitled, Learning the hard way: Australian policies to reduce carbon emissions.

Because Australian governments have introduced more than 300 programs to tackle climate change since Australia signed the Kyoto Protocol in 1997, we can assess the evidence of what works and what does not in reducing carbon emissions. The evidence shows that what reduces emissions most effectively and cheaply is the creation of a market.

In this report, Grattan analyses these 300 programs and finds that three market-based schemes have produced 40 per cent of Australia’s emissions reductions since 1997, once land clearing is excluded. This is easily the largest amount of reduction produced by any mechanism government has tried.

By contrast, $7 billion of grant-tendering schemes – upfront grants to companies for proposals to reduce emissions – have done very little to reduce greenhouse pollution. Governments have also spent $5 billion on rebate programs to encourage the purchase of low-emission products. Again, the impact on emissions growth has been minimal.

A fourth kind of program – energy efficiency standards – can reduce emissions cheaply and effectively, but is limited in scope. Based on experience, only a market-based model can meet Australia’s 2020 target, endorsed by both main political parties, of reducing annual emissions by five per cent below 2000 levels.

Photo: david.nikonvscanon / flickr