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Australia's Carbon Pricing Strategies in a Global Context *
Author(s) -
CLARKE HARRY,
WASCHIK ROBERT
Publication year - 2012
Publication title -
economic record
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.365
H-Index - 42
eISSN - 1475-4932
pISSN - 0013-0249
DOI - 10.1111/j.1475-4932.2012.00798.x
Subject(s) - protectionism , unintended consequences , context (archaeology) , economics , carbon fibers , emissions trading , greenhouse gas , carbon offset , international economics , natural resource economics , business , paleontology , ecology , materials science , composite number , political science , law , composite material , biology
The sectoral impacts of Australia's carbon pricing policies are analyzed in a setting where Australia acts unilaterally to address its carbon emissions and where there is no global market for traded carbon permits. While theory and interest group advocacy suggest a case for compensating Australian producers whose outputs become less competitive because Australia unilaterally prices carbon, this case is sometimes exaggerated. For example, in the ferrous metals sector, analysis suggests that gains from such refinements are low since carbon leakages and adverse competitiveness effects are small. In other sectors – such as non‐ferrous metals – the effects are more pronounced. Exaggerating the competitiveness costs of carbon pricing risks policy overreaction and unintended protectionism, thereby reducing the net benefits from Australian carbon pricing.