This discussion paper invites individuals, organisations, and institutions to consider and comment on key issues and possible action. The paper addresses how to achieve any given target for greenhouse gas reduction in a way that causes least cost to the economy, promotes innovation and is fair. It makes the case that the efficiency properties of market mechanisms have an important role to play.
- Least cost adjustment - the most efficient and effective policies will be the ones that give us the lowest costs of adjustment and the greatest chance of prospering during the transition. If market-like mechanisms and robust institutional arrangements are used to bring about this transition, then in the longer term there could be economy-wide benefits.
- Limit and trade rights to emit - the first step in an efficient and effective policy to meet Australia’s emissions reduction targets is to create a property right to emit greenhouse gases. Only a government has the power to do this. Government must end the practice of free and unlimited emissions.
- The power and prices of the markets - the price of emissions certificates would be determined by the interaction of the numbers of certificates supplied by the government and the number demanded by producers and other groups.