University Economics: Climate Change Policies Assignment

This assignment delves into the economics of climate change, exploring various policies and mechanisms designed to mitigate greenhouse gas emissions. The first question contrasts the carbon tax policy of the former Labor government with the direct action plan of the Coalition government in Australia, highlighting their differing approaches to emission reduction targets. The second question takes on the role of a senior researcher within the UNFCCC, analyzing the potential of linking the European Union Emissions Trading Scheme (EU ETS) with the New Zealand Emissions Trading Scheme (NZ ETS). The assignment investigates the motivations behind linking these schemes and assesses the potential gains and losses for participants in each scheme. The assignment also reviews the Kyoto Protocol, the Paris Agreement, carbon pricing instruments, carbon leakage, and different approaches to allocating emission responsibility, providing a comprehensive overview of the economic and policy dimensions of climate change.

Geography
Climate Change Economics
Question 1
Illustrate with a diagram and explain in words how the former Labor
Government’s carbon tax policy compares with the Coalition Government’s direct
action plan (Response in one paragraph under 100 words)?
Both the former labour government and the current coalition government agree on
carbon emission reduction target but they disagree on the mechanism of
implementation.
Under labor government policy those companies or organizations that produce largest
amount of carbon emissions are paying the highest amount of money. In other words, it
means the biggest polluters pay more thus giving the polluters incentive of curbing and
reducing carbon emissions. Meanwhile, for the coalition government, the government
undertakes open tendering process with businesses for carbon emission reduction
projects. The coalition government believes that this strategy is cheaper in reducing
emissions and better for the economy as compared to the electricity tax.
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Geography
Question 2
Assume you are a senior researcher with the United Nations Framework
Convention on Climate Change (UNFCCC). The Head of the research branch has
requested a briefing note on the possibility of linking the European Union (EU)
Emissions trading scheme (ETS) with the New Zealand (NZ) ETS. She has asked
for precise and concise answer to the following two questions (assume the linking is
direct and bilateral).
a) In dot points what is the key motivation for linking two emissions trading
schemes (Respond in less than 60 words)?
 A combined market, such as European Union-United States Emissions Trading
System covers a larger share of the OECD emissions; this does form the backbone
for an emissions trading system
 Defined reduction target holds priority over a relative increase in allowance prices
 Linking of EU and NZ ETS allows for a link to a larger regime with a higher
carbon-dioxide price;
 International market allows for setting a limit on total emissions; the market allows
access to low-cost permits at low transaction costs
b) Assume the initial price of carbon is higher in the EU ETS. Do NZ ETS net
buyers of emissions permits gain or lose? Do EU ETS net sellers of
emissions permits gains or lose? Briefly explain (in less than 60 words).
New Zealand wishes to minimize costs, and, meet its Kyoto targets. When New Zealand
joints EU ETS, the price & policy are set by the EU ETS. NZ ETS buyers win as the
price of emission permits per tonne is higher in the international markets, certain firms
may move to this market; there is an international limit. EU sellers will gain; the permit
selling will not be at a lower price; the EU does not allow for the prices to fall. The
price is lower for an industry if there is a possibility of carbon leakage, the transfer of
production to a country with a lower carbon emission price. Higher prices push for
movement towards renewable sources of energy.
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Geography
Reflect: For the cartoon below, come up with interesting text related to climate
change.
From left
MAN 1: Hey, don’t you think you inhaling a lot more smoke than the smoker over
there?
MAN 3: If uncomfortable he should move.
MAN 2: (To MAN 1) He found me here.
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