Climate Change Economics Report- University of Example

This report provides an analysis of climate change economics, focusing on the impact of carbon pricing and policy on emissions. The report examines the Australian government's approach to climate change, comparing different policy approaches such as the carbon pricing and direct action. It then analyzes the impact of these policies on the environment, including how these policies and the different carbon market affect emissions. The report also explores the role of the carbon market, and the impact of the carbon price on the industry. The report concludes by discussing the benefits of these policies and their impact on reducing carbon emissions.

Running head: ECONOMICS AND POLICY
CLIMATE CHANGE ECONOMICS AND POLICY
Name of the Student
Name of the University
Author’s Note

1ECONOMICS AND POLICY
Table of Contents
Question 1........................................................................................................................................2
Question 2........................................................................................................................................3
References........................................................................................................................................5

2ECONOMICS AND POLICY
Question 1
Coalition policy and Labor support policy both policies support emissions reduction of
Australia .However, their mechanism differs from each other. Labor carbon pricing shows that
country’s largest polluters have to pay for the pollution amount and for this they are given
incentive in order to reduce emissions. Coalition policy shows that, businesses compete to win
tenders and for this they are paid to undertake emission reduction projects. The Coalition aims to
create an environmental friendly workforce in order to undertake conservation projects. The
revenue earned from a carbon price gives funds to support extra cuts and help those who are
affected by the price to adapt. Thus effective direct action plan needed in order to stop imperfect
incentive. Direct action can be applied to activities that cannot be incorporated in a carbon
trading scheme (Mey and Hicks, 2015) (Wade and Hutchens, 2013)..

3ECONOMICS AND POLICY
Figure 1:CO2 Emissions
Source: (Abs.gov)
The above figure shows that the electricity generation is the largest contributer.
After the introduction of Coalition direct plan CO 2 emissions have decreased and this is shown
below:

4ECONOMICS AND POLICY
2010 2011 2012 2013 2014
14
14.5
15
15.5
16
16.5
17
17.5
18
CO2 emmisons
CO2 emmisons
Figure 2: CO2 emissions
Source: (World bank, 2017)
Question 2
a) Two emissions key motivation for linking are:
o Both ETS’s are associated with global carbon markets since they allow the
importing of the majority of the Kyoto Protocol emission units.
o Both issues emitters free allocation, without any auctions proposed in the short
term.
b) If EU ETS initial price of carbon is high then NZ ETS net buyers of emissions would
incur loss while EU ETS net sellers will gain, this is due to the fact, carbon tax in EU
ETS makes trade costly thus loss occurs in the country which is involved in it. Pricing
of carbon result in higher prices of carbon intensive goods and services thus provide

5ECONOMICS AND POLICY
incentives to reduce emissions, with higher carbon prices emissions reduction.
(Bell,2017) (Shahnazari,2014).
References
Bell, W.P., Wild, P., Foster, J. and Hewson, M., 2017. Revitalising the wind power induced
merit order effect to reduce wholesale and retail electricity prices in Australia. Energy
Economics, 67, pp.224-241.
Mey, F. and Hicks, J., 2015, June. Community renewable energy in Australia: exploring its
character & emergence in the context of climate change action. In 5th EMES International
Research Conference on Social Enterprise. Helsinki (pp. 1-24).
Shahnazari, M., McHugh, A., Maybee, B. and Whale, J., 2014. Evaluation of power investment
decisions under uncertain carbon policy: A case study for converting coal fired steam turbine to
combined cycle gas turbine plants in Australia. Applied Energy, 118, pp.271-279.
Wade, M. and Hutchens, G., 2013. Tony Abbott’s new direct action sceptics. The Sydney
Morning Herald.
Worldbank(2017).[online]Availableat:https://data.worldbank.org/indicator/EN.ATM.CO2E.PC?
end=2014&locations=AU&start=2014&view=bar