1. Carbon Pollution Reduction Scheme (Australia)
Lily Mu & Christina Wu
Econ HL

2. Background Info Australia hottest and driest continents on earth
Climate Change
Food production
Water supplies
Great Barrier Reef
Tourism Industry and environmental challenges facing Australia and the rest of the world.

3. Science Behind Carbon Pollution
Carbon pollutionclimate change
Higher temp, droughts, extreme weather
Human activitygreenhouse gas increase rise in global mean temperature

5. Green Paper

6. White Paper

7. Strategy and Aims Mitigation
Reduce Australia’s greenhouse gas emissions
60% emissions reduction (2050)
Adaptation
Adapt to climate change that cannot be avoided
International engagement
Achieve low carbon economy
Households and business assistance
adjust to carbon price
Ensure scheme achieves its central objectives
Use every cent raised to assist households and business

8. Scheme Coverage
75% national emissions
1000 firms
6 Kyoto gases

10. Stakeholders

11. Commitments to Households
Increase payments to low-income households, pensioner, senior
Provide assistance to middle income households

12. Assistance to Business and Workers
Climate Change Action Fund
Investment in new low-emissions technologies
spread of innovation and environment-friendly practices among small/medium sized businesses
Provide assistance to regional workers

13. Model – Negative Externality
Quantity
(S)MSC
(S)MPC
tax Pt
Pso Pp
Increase in Price
(D)MPB
(D)MSB
Qso Qp Qt
Price
Decrease in Quantity

14. What is the Market Failure?
Carbon pollution
Too much produced at too low of a price
No cost

15. What is the proposed remedy?
“Carbon pollution reduction scheme”
Cap-and-trade system of emissions trading for greenhouse gases.
A central authority sets a limit/cap on amount of a pollutant that can be emitted.
Introduce in Australia in 2010 as part of its climate change policy

16. Green Paper Objectives:
Meet Australia’s emissions reduction targets in most flexible & cost-effective way
Support an effective global response to climate change
Provide for transitional assistance for the most affected households and firms

17. How does it work?
Buy a 'pollution permit' for each tonne of carbon they contribute to atmosphere.
Concentrate on biggest polluters : Around 1000 Australian companies that produce more than tonnes of carbon pollution each year.
99% of all firms in Australia will not need to purchase permits for their emissions.

18. Cap Limit on greenhouse gas emissions
Creates a price for carbon & ability to trade assures that emissions are reduced at lowest possible price.
Must be consistent with longer term goals of reducing Australia’s emissions by 60% compared with 2000 levels by 2050

19. Trade Price of permits will be determined by market.
By trading amongst themselves, firms achieve scheme cap at least cost to economy.

20. White Paper
Government's targets for Greenhouse gas emission reductions
5% below 2000 by 2020 on a one-sided basis or
up to 15% below 2000 by 2020 if also agreed by other major emitters
Indicative national emissions path for first few years of scheme:
In , 109% of 2000 levels
In , 108% of 2000 levels
In , 107% of 2000 levels

21. Does it internalize the externality?
Yes
Best way to reduce carbon pollution while minimizing impact on business & households.

22. Citation
Department of Climate Change. "Australian Government." Carbon Pollution Reduction Scheme. 13 Mar Australian Government of Climate Change. 14 Mar 2009 <
"Carbon Pollution Reduction Scheme." Wikipedia. USA: Wikimedia Foundation, Inc, 2009.
. "Wikipedia." Carbon Pollution Reduction Scheme. 12 Mar Wikimedia Foundation. Inc. 11 Mar <
Socha, Tom. "Air Pollution Causes and Effects ." Health and Energy. 09 Nov Mar <