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Productivity Commission report backs a carbon price in Australia

13 June 2011
Productivity Commission report backs a carbon price in Australia

MELBOURNE: The Australian Government has released a report by The Productivity Commission backing a carbon price as the most cost-effective way to reduce emissions.

The report, Carbon Emissions Policies in Key Economies, states that: “emissions trading schemes were found to be relatively cost effective.” It went on to say that the emissions abatement achieved so far in Australia could have been achieved at a “fraction of the cost” with such a scheme in place. The report stopped short of recommending a starting price for carbon in Australia. 

The report looks at over 1000 emissions reduction measures in eight of Australia’s major trading partners in the energy and transport sectors. It compares the level of action being taken in each country, as well as the cost of abatement achieved to date. 

In terms of the proportion of GDP spent on emissions abatement, Australia ranked well behind both Germany and the UK, and is currently on a par with China and the US. Australia’s spending on emissions reductions amounted to 0.04 – 0.05% of GDP, compared to 0.28 – 0.33% in Germany and 0.08 – 0.10% in the UK.

Caroline Bayliss, Australia Director, The Climate Group, welcomed the report as a timely contribution to the carbon price debate: “This report puts paid to the idea that in acting on climate change, Australia would be somehow leading the world. At the moment, we come up well short of the UK and Germany in terms of spending on emission reductions, to which you could add most of the other countries in Europe.”

It is also important to note that the report does not capture some hugely significant recent commitments, or any public spending on low carbon research and development. For example, China’s 12th Five Year Plan is not included. Nor is the UK’s recent commitment to reduce emissions by 50% by 2025, or South Korea’s huge public support for low carbon technology development. The reality is, we are increasingly falling behind these countries. Australia needs to start moving with much more purpose if we are to compete in the hugely profitable low carbon markets of the future. As this report shows, putting a price on carbon next July would be a very good place to start.”

The report was commissioned by The Multi Party Committee on Climate Change which is currently negotiating on the design of a carbon price for Australia, which the current Labor Government intends to take effect on July 1 next year.

See The Climate Group's Australia work

Australian Government Productivity Commission

Carbon Emissions Policies in Key Economies

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