Australia’s ratification of the Kyoto Protocol and the recent release of the Carbon Pollution Reduction Scheme Green Paper affirm the Government’s commitment toward carbon emissions reduction and the advancement of the environmental cause. Using a naïve model which maximises the environmental cause at the expense of financial impact on the economy, this paper highlights how the failure of the first phase of the European Union Emissions Trading Scheme can be attributed to the over-relaxation of parameters crucial to the success of the scheme as measured by verified reduction in emissions. The Government’s preferred position as elucidated in the Green Paper is then contrasted in this context to illustrate the possible sources of failure that are currently engendered in the Scheme. The implementation of the Scheme will impose great compliance costs on the economy – we argue that the Government’s over zealous protection of business interests may ultimately lead to failure of the Scheme, in which case the businesses and community would have incurred the financial burden over nothing.
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