Carbon Pricing Options for a Post-Kyoto Response to Climate Change in Australia

This paper critically analyses the policy options for establishing a carbon price in Australia in the post-Kyoto context in the light of the Henry Review and other developments. The paper considers some of the key literature in support of market based instruments including a critical analysis of the relative merits of carbon taxes and emissions trading. The pre-Abbott Government history of regulatory responses to climate change in Australia is reviewed, including the Carbon Pollution Reduction Scheme ('CPRS'). A range of 'barriers to change' within the Australian taxation system likely to undermine the operation of carbon pricing options is identified. The paper concludes that the removal of barriers to change is a vital part of any attempts to introduce a carbon price, and that tax expenditure reform should be a key element of all market based responses