Europe, Australia and the slow death of carbon trading

Australia Europe

WITH last week’s federal budget slashing the forecast revenue from Australia’s carbon pricing scheme for the second half of this decade, it’s a good time to have a closer look at the Gillard government’s decision to link the scheme with its embattled European counterpart from 1 July 2015.

It may seem moot to be analysing the medium-term prospects of a scheme that seems likely to be repealed if an Abbott government comes to power later this year. But it is important to understand that, even if the scheme stayed in place, the EU linkage is likely to weaken its effect so drastically that its retention would be scarcely better than its demise. My purpose is not to advocate that demise or support the Coalition’s alternative, “direct action” plan (which I think would be a shameful regression). Rather, in the hope of improving the design of future climate policy, my intent is to expose the linkage decision, and the ideology on which it is based, as mistaken…

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