Saturday, February 13, 2010

Decarbonization in Australia?

Roger Pielke has a working paper about the potential or rather the lack of potential for decarbonization of the Australian economy. He says it would be very hard to achieve the Government's targets given historical rates of decarbonization in both Australia and other countries. Penny Wong has reacted that this ignores international trade in permits or offsets. She is right, Australia doesn't plan on actually decarbonizing to this extent in this timeframe. All the Treasury scenarios show Australia buying a lot of permits in 2020. Our research shows that Australia is still rather inefficient compared to other developed economies and even (adjusting for the differing levels of development) China. Just as China saw a rapid improvement in energy efficiency in the 1980s and 1990s, I believe Australia has considerable potential for efficiency gains (though not as great) if carbon pricing gave the incentive (or command and control forced change I suppose).


  1. David, I recall but don't have at my fingertips that under the CPRS offsets are limited in their use (to something like 5% of total emissions). Is this correct?

    If not, what are the limits on the use of offsets?


  2. As far as I am aware that is a proposal in the US legislation (Dingell-Boucher) but not in Australia. There is a lot of online discussion criticizing the ability to offset Australia emissions with overseas emissions reductions under the CPRS.

  3. I'll see if I can track down what I am thinking of . . . if there are no limits on offsets, then what is to prevent Australia from simply pursuing some modified version of BAU?

  4. As long as the carbon price stays above zero then that wouldn't be business as usual. Projects in other countries won't take place unless the developers can get a positive price for the credits. There is also a renewable energy target. But I'm not really very knowledgeable at all about the details of the CPRS, so you should ask someone who is more up on the details.