Responsive Climate Change Policies in Australia

Student Name: YILU LIU

Student ID:    18347081

Latrobe University: Bundoora Campus

Word count: 1721

Responsive Climate Change Policies in Australia

1. Introduction

Situated in the 21st Century international business environment, the science of climate changes has profound influences on business operations and practices, especially in the sector of greenhouse gas emissions. Major countries have released a series of environmental protection and control laws to guide business ethics with legitimacy, which is in alignment with climate change economics that directly impact on national well-being in politico-economic perspectives. This essay aims to compare and contrast two existing climate changes policies in Australian, which are Carbon Tax 2012 and Coalition Government’s Direct Action Plan 2014. It will also put forward recommendations to Australia coming up with an alternative policy that is supposed to outweigh the two analyzed policies.

1. Relationship between Climate Change Economics and Policies

Formulation and implementation of climate changes policies are outcomes of examined and recorded climate changes phenomena, which have produced great effects on natural environment and human activities. According to statistics in the last few decades, greenhouse gas emissions aroused the enhanced greenhouse effect, which in turn broke the atmospheric balance and resulted in temperature changes, precipitation, extreme weather events and risen sea levels (Karl & Trenberth 2003). Governmental expenditure spent on preventative actions, controlling practices, knowledge distribution, restoration of disastrous events, welfare of citizens, education, etc. have been increasing annually to create financial burdens on major governments. Take Australian government for example, according to Financial Times (2006), natural disasters have caused A$9 billion in 2015, accounting for approximately 0.6% GDP of that year and the costs are expected to double by 2030. Thus, from the economic perspective in the long run, mitigation of greenhouse gas emissions is less costly than to develop the economies on the basis of sacrificing the environment. Global Warming Potential was therefore created to measure the potential impacts of the greenhouse gases, which is utilized to guide macro-environmental direction for climate controls in business realm, such as resources allocation, business conducts, technological innovation, etc. so as to reach economic efficiency and balance with the environment (Shine, et al 2005). In addition, reflecting the issue from a globalized viewpoint, transference of environmental burdens from developed countries to developing countries through economic activities has further disrupted the world into a worse planet where problems of climate changes on the less developed countries are worsening to influence the global ecological systems’ well-beings (Mendelsohn, Dinar & Williams 2006). In a word, effective responsive policies to mitigate risks of climate changes are imperative for economic concerns in a sustainable manner.  

1. Comparison and Contrast of Carbon Tax and Direct Action Plan

3.1. Carbon Tax 2012

Carbon Tax 2012 was a carbon pricing policy that Gillard Labor Government released in 2011 and annulled in 2014 by the Abbott Government. The policy aimed to comprehensively enhance efficiency of energy use through technological innovations throughout Australia, which was supposed to be led by largest greenhouse gas emitting organizations in the industrial sector as well as electric power utilization. Altogether Carbon Tax intended to reduce greenhouse gas emissions by 5% by 2020 in comparison with the 2000 levels and to reduce by 80% in the following three decades. To achieve the purpose, Carbon Tax 2012 regulated that organizations were to record their carbon footprints and those that emitted over 25,000 tonnes of greenhouse gases and equivalents should obtain emission permits from the governmental departments (Bailey, et al 2012). In other words, organizations were to purchase carbon units from the government or gain carbon units as subsidiaries. Specifically, Carbon Tax regulated that unit price for carbon per tonne was $23 in 2012, which increased to $24.15 in a year’s time (Jotzo 2012; Peel 2014). The pricing scheme was determined as so to be ready for transition to emissions trading scheme in 2014, when the carbon permits would be restricted to further reduce greenhouse gas emissions. The carbon emission charges were to be used in compensation to industries and households that may be faced with cost increase in electricity fees for example.

3.2. Direct Action Plan 2014

Direct Action Plan was an alternative policy to replace Carbon Tax, which adopted totally different managerial philosophy compared with Carbon Tax. Direct Action Plan was released to encourage environmental polluters by offering them financial rewards to reduce greenhouse gas emissions instead of punishment. In 2013, the Coalition Government announced that the Emissions Reduction Fund would take into effect, which was to provide $2.55 billion within four-year time frame beginning in 2014 and to enable carbon emission reduction by 5% by 2020 compared to the 2000 levels (Department of the Environment and Energy). Direct Action Plan intended to arouse competitiveness among largest polluters in the country to gain financial incentives by reducing carbon emissions, which was esteemed as the most efficient scheme by the Coalition Government. Specifically, organizations were to get involved in reverse auction to win contractual bonds from the Australian government with support in the form of funds to their business project management. In addition, the Coalition Government planned to subsidize 15,000 young people financially for them to accomplish projects in relation to environmental management, which was given a term as Abbott’s Green Army (news.com.au 2014). However, the Coalition Government’s Direct Action Plan was challenged by the U.S. and emerging countries of China and Brazil in its carbon emission reduction target, which was regarded as too low (The Guardian 2015).

3.3. Comparative Evaluation of the Two Policies

To conduct evaluation of the two policies, evaluation criteria will be chosen first. Contextualized in a national environment, the following criteria are esteemed to be priorities, including cost-effectiveness, economic efficiency, acceptability, flexibility, transparency, political influences, technological impacts, polluters pay principle, distribution of benefits and costs across countries and within the nation’s economic and societal environments (Guglyuvatyy 2010). Therefore, methodologically, the Delphi Study model will be adopted for evaluation, which is a structured communication technique that collects information to be reviewed by a panel of experts in an independent manner, answering questionnaires and conclude relatively objective viewpoints. Research groups utilizing the Delphi Study method will summarize the key points of each expert’s information and opinions and pass them to the next expert by such analogy, who are to provide opinions anonymously. Each expert will come up with new opinions until the panel finally reach convergence and provide a relatively consistent and reliable scheme (de França Doria, et al 2009).