In a submission to the Garnaut Climate Change Review, released today, the Productivity Commission argues that with a national Emissions Trading Scheme (ETS) in prospect, a number of existing greenhouse policies will no longer be justified and could prove counterproductive.

Responding to a request from the Garnaut Review, the Commission examines different categories of greenhouse policy and whether they would complement an ETS. It also considers the scope to lower the costs of emission reductions by widening the sectoral coverage of policy action, either within the ETS or by other means.

The Commission notes that an effective ETS, by putting a price on carbon throughout the economy, will enable Australia to achieve any given emission reduction target in the most cost-effective way. It finds that policies directed at promoting R&D and overcoming barriers to the take-up of energy efficient technologies would yield further benefits if well-designed.

However, other policies now need to be reconsidered. In particular, the Commission concludes that continuation of the Mandatory Renewable Energy Target would not achieve any additional emission reduction benefit, but would increase abatement costs for the Australian community.