The more you look into the Government’s proposed Carbon Pollution Reduction Scheme (CPRS) and the approach they have taken to date the more the mechanics of the scheme and potential pitfalls become apparent.

So far the Government have released a green paper and white paper outlining how the CPRS may operate. They have also release a medium term target of a 5 to 15% reduction on 2000 levels by 2020 somewhat setting a ‘cap’ on potential emissions reduction. The Government also launched a mass media advertising campaign telling the general public that they are proposing to launch the CPRS in 2010.

Now we have the Government launching an inquiry (we did – seems to have been canned for now) into the merits of an emissions trading scheme. I understand that we have unprecedented economic conditions but as The Australian article – ‘We Need to Start Emissions Debate’ suggests shouldn’t we have looked at this before?

As has been shown in the European Union’s Emission Trading Scheme there is potential for significant price volatility for carbon ‘permits’. The problem here is that if the price drops below a certain level then there is really no incentive for Companies to reduce emissions. That is the cost of the permits are potentially less than what it would cost to implement emissions reduction initiatives. This, combined with the enormous resources required to administer such a scheme really makes me a little nervous as to how effective it may be.

We also need to focus on what we are really trying to achieve here. My understanding is that the objective is to reduce carbon emissions and thus avoid ‘dangerous climate change’. Given Australia’s two main sources of emissions are stationary energy (mainly coal generated electricity) and agriculture in the absence of many of us converting to a vegan lifestyle the best solution is reduce electricity/energy consumption and increase our use of renewable energy.

If this is the objective then how about we not try and over complicate things and put a simple ‘price’ on carbon. More and more a Carbon Tax looks like the most effective way to achieve this.

Left and Right Agree on Carbon Tax provides a good insight into potential pitfalls of the CPRS and how a carbon tax can actually encourage ALL big pollluters to reduce their emissions.

Economist Warns of Dire Consequences of Emissions Scheme