Business Spectator - The great carbon debate: part 2

The authors will today address the International Climate Change conference in Sydney. The article below is an edited extract of their paper, in Climate Change: Getting it right, published by the conference host, the Committee for Economic Development of Australia.


Title: Why a hybrid policy is better for Australia (출처: Business Spectator - The great carbon debate: part 2)

Authors: Warwick J McKibbin and Peter J Wilcoxen
(Warwick J McKibbin is professor and director of the Centre for Applied Macroeconomic Analysis in the ANU College of Business and Economics. Peter J Wilcoxen is an associate professor of economics and public administration at the Maxwell School of Syracuse University.)

※ 메모:

Carbon Trading:

The idea behind a cap-and-trade permit system is relatively straightforward. A target for emissions is chosen for a given year. Emission permits are then printed and distributed for that year. Legislation is also enacted that requires an emitter of carbon to have permits equal in number to its emissions, and to specify rules for monitoring polluters and punishing violators (for example, the penalty for non-compliance is often a very high fee).
The strength of the system is that the emissions outcome is known and specified explicitly in the policy. However, the price of an emissions permit (often called the price of carbon) will not be known until after the market clears. Moreover, it will move around with shifts in the demand for permits, and can be highly variable.
Moreover, what matters for the climate is the concentration of emissions in the atmosphere. It is not the flow of emissions each year but rather the accumulation of these emissions over time that is important.
...
A conventional carbon-trading market performs poorly in this context because it targets the annual flow of emissions rather than the stock.
A better policy would be to have a flow of emissions each year that is determined in a manner allowing for cost-smoothing over time. The hybrid approach allows exactly that. ... (본문 중에서)