What role for policies to supplement an Emissions Trading Scheme?

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.

Background information

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• Preliminaries
  Cover, Copyright, Foreword, Contents and Abbreviations
• Overview
• Chapter 1 Policy framework
  1.1 Scope of the submission
  1.2 Responding to a global externality
  1.3 Framework for supplementary policy
• Chapter 2 Technology and energy efficiency
  2.1 Introduction
  2.2 Technology policies
  2.3 Energy efficiency policies
  2.4 Other government action to facilitate mitigation
  2.5 Good practice regulatory principles
• Chapter 3 Coverage of an Emissions Trading Scheme
  3.1 Deciding on coverage
  3.2 Land use, land use change and forestry
  3.3 Agriculture
  3.4 Other sectors
• Appendix A Quantifying the costs and benefits of low-emissions energy targets
• References