The Hon. Greg Combet (Assistant Minister for Climate Change and Energy Efficiency) stated in his speech that, “Australia is already the driest inhabited continent on earth, and is heavily exposed to the impacts of climate change and faces huge environmental and economic costs from climate change impacts including on water security, agriculture, energy supply, health, coastal communities and infrastructure” (The Hon. Greg Combet AM, 2010).
1. M.Harris: Analysis on Environmental Effects
The discount rate is used as a measure to determine future costs and benefits from climate change. However, according to M.Harris, there is uncertainty when using this method. He states that other methods that include ecological as well as economic costs and benefits should be chosen. M.Harris examined two studies, one by William Nordhaus and other by Cline. William Nordhaus said that the most favorable policy would be a minute reduction in greenhouse gas emission lower than recent estimations. Whereas, Cline focused on long-term effects and used a low discount rate of 1.5% to level present and future cost. From these studies, M.Harris concluded, “Even though costs of aggressive action appeared higher than benefits for several decades, the high potential long-term damages sway the balance in favor of aggressive action today”. Furthermore, M.Harris argued that stabilization of the global climate should be the target and not economic optimization of costs and benefits. According to M.Harris, the present rate of emissions from carbon dioxide and other gases will carry on to gather in the atmosphere. Also, in order to stabilize the gathering of greenhouse gases, it would require a major cut below current emission levels. If actions are taken to prevent global climate change from happening, this will have an impact on the economy (M.Harris, 2002). GDP, consumption and employment will be affected and the government will take strict measures to lower emissions of carbon dioxide (M.Harris, 2002).
2. Policy tools
Policies and plans are required to reduce carbon emissions in the coming centuries. These policies and plans can assist to deploy climate friendly energy production and use of technologies. There include tradable permits, carbon taxes, education and training, use of new technologies and research and development. The realization of the severe effects of carbon emissions, happening due to the burning of fossil fuels, has led to the suggestion for non-market mechanisms such as regulation and market mechanisms such as tradable emissions permits and carbon taxes, to lower emissions (Cornwell. Antonia, 1996). In terms of efficiency, market methods are usually preferred and carbon tax is said to be the easiest policy to implement and monitor (Cornwell. Antonia, 1996). 2.1Policy tools: Carbon Pollution Reduction Scheme
The emission trading scheme, or ‘Carbon Pollution Reduction Scheme’, is a 'cap and trade' system. A company purchases a permit from the government and only then they can emit greenhouse gases. The government caps the level of emissions by limiting the amount of permits obtainable. The plan of the government is to reduce the stock of permits little by little each year-...