The Greens have proposed an interim carbon tax for Australia. The basic idea is that there would be a carbon tax of $20 for two years, and in that time, policy decisions on an ETS would be made. The details are here. Professor Garnaut made a similar proposal in the Garnaut Review.
This is a very sensible idea. A big issue with carbon pricing policy is that before a carbon price is introduced, there is a very strong incentive for polluters to act like the sky will fall in. This is because they know that would lead to weaker policy, or more compensation, or both. This creates a very bad environment for a government to make decisions about targets, especially about targets for the next ten years or longer. Introducing a carbon price first is a much wiser way to go about things.
This would probably be a good idea in the US as well. Getting climate legislation through the US Senate is very difficult, and will become more difficult now that the Republicans have an extra senator. It may be easier to introduce a low carbon tax now (possibly equal to the price floor in the proposed US legislation), and then introduce a cap on emissions later. Australian policy could show the way forward for US policy.
Good climate policy provides certainty for investors in low emission technology. When a cap is introduced, it could be possible to maintain the current price as a floor in carbon price.
Update: This architecture has been adopted for Australia’s proposed carbon price mechanism.
January 24, 2010 at 3:27 am
Given a planet with the size, composition, frangible ecology and finite carrying capacity of Earth, could someone comment on how much longer the global limitations of Earth can be expected to sustain the unsated overconsumption, unbridled overproduction and unregulated overpopulation activities of the human species in our time?
Despite every effort to appear reasonable and sensible, the self-proclaimed Masters of the Universe among us approach economic and ecologic problems in patently unsustainable ways by adamantly advocating and recklessly pursuing greed-driven schemes based upon the seemingly endless growth of human consumption, production and propagation that will lead humanity to precipitate, however inadvertently and soon, the destruction of life as we know it and the Earth as a fit place for human habitation, I suppose.
If the human community is in a race against time, even at this late hour when pathological arrogance, greed-mongering and elective mutism rule the world, is it ever too late to speak of what is true to you or to do the right thing, as best we can?
April 27, 2010 at 10:09 pm
[...] could have negotiated with the Greens to implement an interim carbon tax, while the details of an emissions trading scheme are worked out [...]
November 10, 2010 at 9:27 pm
[...] January 2010, the Greens proposed an interim carbon tax for Australia. The idea being to introduce a carbon tax (or fixed-price ETS) and transition to an [...]
February 25, 2011 at 1:17 pm
[...] February 25, 2011 Australia’s carbon price architecture explained Posted by Peter Wood under Carbon Price Signals, Politics | Tags: ALP, Australian Greens, carbon price, carbon price revenue, fixed price ETS, MPCCC | Leave a Comment The multi-party climate change committee has announced more details about carbon pricing in Australia. The approach is to have an initial fixed-price, and then to later transition to an emissions trading scheme. This is more-or-less the approach that I described in January 2010 here. [...]