The political economy of Australia’s climate change and clean energy legislation: lessons learned

Spencer, Thomas and Carole-Anne, Senit and Anna, Drutschinin (2012): The political economy of Australia’s climate change and clean energy legislation: lessons learned. Published in:

Abstract

In November 2011, Australia adopted a highly innovative, ambitious and comprehensive climate change policy, the Clean Energy Legislative Package(CELP). This outcome was not self-evident.The CELP embeds an innovative carbon pricing mechanism in a comprehensive and highly generous package of complementary measures designed to increase its public acceptability, and environmental and economic efficiency. It is combined with progressive income tax cuts, increases in government transfer payments, and measures to shield emissions and trade-intensive industry and promote investment in renewable energy, energy efficiency and R&D. In addition, the package contains innovative governance mechanisms to shield it from the vagaries of the political cycle, and increase the political and administrative costs of dismantling it. In all, these measures increase the CELP’s chances of survival and provide an example of policy innovation for other countries to follow, keeping in mind their particular national circumstances.

• Item Type: MPRA Paper
• Language: English
• Keywords: Carbon pricing, political economy of climate policy, Australian climate policy
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q52 - Pollution Control Adoption and Costs ; Distributional Effects ; Employment Effects; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q40 - General; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q5 - Environmental Economics > Q54 - Climate ; Natural Disasters and Their Management ; Global Warming

References

REFERENCES Data sources Australian Bureau of Statistics (ABS) available here: http://www.abs.gov.au/ausstats/abs@.nsf/web+pages/ statistics?opendocument#from-banner=LN

Australian Electoral Commission (AEC) available here: http://www.aec.gov.au/Elections/Federal_Elections/ Australian Government, Department of Foreign Affairs and Trade (DFAT): http://www.dfat.gov.au/facts/electoral_ system.html

International Energy Agency (IEA) data available here: http://www.iea.org/stats/index.asp International Monetary Fund (IMF) data available here: http://www.imf.org/external/pubs/ft/weo/2012/01/ weodata/index.aspx

United Nations (UN) data available here: http://mdgs. un.org/unsd/mdg/SeriesDetail.aspx?srid=749&crid United Nations Framework Convention on Climate Change (UNFCCC) data available here: http://unfccc.int/di/ DetailedByParty.do

World Bank data available here: http://data.worldbank. org/indicator/EN.ATM.CO2E.PC?order=wbapi_data_ value_2008+wbapi_data_value+wbapi_data_valuelast& sort=desc.

Publications Abrell, J. et al. (2011), “Assessing the Impact of the EU ETS Using Firm Level Data”, Bruegel Working Paper 2011/8.

Andersen, M. (2010), “Europe’s experience with carbon energy taxation”, S.A.P.I.EN.S.

Australian Bureau of Statistics (2012), “Australian National Accounts: National Income, Expenditure and Product”, June Quarter 2012.

Australian Bureau of Statistics (2003), “National Income, Expenditure and Product”, December Quarter 2003.

Australian Centre for Independent Journalism (2010), “A Sceptical Climate: Media Coverage of Climate Change in Australia 2011”.

Australian Government (2012a), “Report of the Independent Inquiry into the Media and Media Regulation”, Report to the Minister for Broadband, Communications and the Digital Economy, 28 February 2012.

Australian Government (2011a), “Securing a clean energy future: The Australian Government’s Climate Change Plan”, Commonwealth of Australia.

Australian Government (2011b), “Multi-Party Climate Change Committee Clean Energy Agreement”.

Australian Government (2011c), “Household Assistance – Fact Sheet”. Available at: http://www.cleanenergyfuture. gov.au/household-assistance%e2%80%94tax-reform/. Date accessed: 02.10.2012.

Australian Government (2010), “Australia’s future tax system Report to the Treasurer December 2009”, Part One Overview, Commonwealth of Australia.

Australian Labour Party and Australian Green Party (2010), Agreement between the Australian Greens and the Australian Labour Party, 1 September 2010.

Australian Treasury (2011), “Strong Growth, Low Pollution: Modelling a Carbon Price Update”.

Brannlund, R. and L. Persson (2012), “To Tax or Not to Tax: Preferences for Climate Policy Attributes”, Climate Policy, 12(6).

Brunner, S. et al. (2012), “Credible commitment in carbon policy”, Climate Policy, 12(2).

Burgmann, V. and H. Baer (2012), Climate Politics and the Climate Movement in Australia, Melbourne: Melbourne University Press.

The Climate Institute (2012), “Climate of the Nation 2012 Australian Attitudes on Climate Change”.

Coase, R. (1960), “The Problem of Social Cost”, Journal of Law and Economics, 3.

Clinch, J.P. et al. (2006), “Environmental and wider implications of political impediments to environmental tax reform”, Energy Policy, 34.

Crowley, K. (2010), “Climate Clever: Kyoto and Australia’s Decade of Recalcitrance” in Harrison and Sundstrom (eds) Global Commons, Domestic Decisions: The Comparative Politics of Climate Change, Cambridge, MA: MIT Press.

Department of Climate Change (DCC) (2010), Australia’s Fifth National Communication on Climate Change, Department of Climate Change, Canberra, Australia.

Department of Foreign Affairs and Trade (DFAT) (2011), Trade at a Glance 2011, DFAT, Canberra, Australia.

European Commission and Department of Climate Change and Energy Efficiency (2012), “Australia and European Commission agree on pathway towards fully linking emissions trading systems”, Joint Media Release, 28 August 2012.

European Commission, information on carbon leakage and the EU ETS: http://ec.europa.eu/clima/policies/ets/ leakage/index_en.htm.

Fielding, K. et al. (2012), “Australian politicians’ beliefs about climate change: political partisanship and political ideology”, Environmental Politics, 21(5).

Garnaut, R. (2008), The Garnaut Climate Change Review: Final Report, Cambridge: Cambridge University Press. See in particular Chapter 16 “Sharing the burden in Australia”.

Garnaut, R. (2011), The Garnaut Review 2011: Australia in the Global Response to Climate Change, Cambridge: Cambridge University Press. See in particular Chapter 6 “Better Climate, Better Tax”.

Gaunt, M., et al. (2007), “Public acceptability of road user charging: the case of Edinburgh and the 2005 referendum”. Transport Reviews, 27(1).

Giddens, A. (2008), “The Politics of Climate Change: National Responses to the Challenge of Global Warming”, Policy Network.

Harrison, K. and Sundstrom, L.M. (2010), Global Commons, Domestic Decisions: The Comparative Politics of Climate Chang, Cambridge, MA: MIT Press.

Hourcade, J.-C., et al. (2010), “Carbon Tax and Equity : The Importance of Policy Design”, in D. Soares et al. (eds), Critical Issues in Environmental Taxation, Oxford: Oxford University Press.

Ipsos Social Research Institute (2012), Climate Change Report 2011, report released 27 July 2012.

Kallbekken, S., et al. (2011), “Do you not like Pigou, or do you not understand him? Tax aversion and revenue recycling in the lab”, Journal of Environmental Economics and Management, 62.

Kallbekken, S. and Saelen, H. (2011), “Public acceptance for environmental taxes: self-interest, environmental and distributional concerns”, Energy Policy, 39.

Lachapelle, E. (2009), “Interests, institutions and ideas: explaining cross-national differences in the implicit price of carbon” presented at the Annual Meeting of the American Political Science Association, September, Toronto, Canada.

Lowy Institute, “The Lowy Institute Poll 2012”.

Manne, R. (2011), “Bad News: Murdoch’s Australian and the Shaping of the Nation”, Quarterly Essay 43.

McCright, A and R. Dunlap (2011), “The politicization of climate change and the polarization in the American public’s views of global warming, 2001–2010”, The Sociological Quarterly, 52 (2).

Milne, J.E. (2008), “Carbon Taxes in the United States: The Context for the Future”, in The Reality of Carbon Taxes in the 21st Century, A Joint Project of the Environmental Tax Policy Institute and the Vermont Journal of Environmental Law, Vermont Law School.

Patay, M. and O. Sartor (2012), “Australia’s Clean Energy Future Package: How does it compare with the EU’s approach?”, CDC Climat Climate Brief No. 15, May 2012.

Rahn, W. (1993), “The Role of Partisan Stereotypes in Information Processing about Political Candidates”, American Journal of Political Science, 37(2).

Richardson, D. and R. Denniss (2011), “Mining the truth: The rhetoric and reality of the commodities boom”, The Australia Institute, Institute Paper No. 7.

Spencer, T. and D. Fazekas (forthcoming), “Distributional Choices in EU Climate Policy: 20 Years of Policy Practice”, Climate Policy, accepted for publication, manuscript on file with the author.

Stavins, R. (2009), “The Wonderful Politics of Cap and Trade: A Closer Look at Waxman-Markey”, Huffington Post. Available at: http://www.huffingtonpost.com/robertstavins/ the-wonderful-politics-of_b_208581.html. Data accessed: 02.10.2012.

Tranter, B. (2011), “Political divisions over climate change and environmental issues in Australia”, Environmental Politics, 20 (1).

Victor, D. (2011), Global Warming Gridlock: Creating More Effective Strategies for Protecting the Planet, Cambridge: Cambridge University Press.

Weitzman, M. (1974), “Prices vs. Quantities”, The Review of Economic Studies, 41(4).

Whitesell, W. (2011), Climate Policy Foundations: Science and Economics with Lessons from Monetary Regulation, Cambridge: Cambridge University Press.

Zaller, J. (1992), The Nature and Origins of Mass Opinion, Cambridge: Cambridge University Press, Cambridge.