Carbon Dioxide Emissions in Australia and Climate Change

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"Market-based policies are a proven way to limit carbon pollution and channel capital and innovation into clean energy, helping to avert the catastrophic consequences of climate change”
- EDF vice president for international climate, Nathaniel Keohan


In a contemporary political setting, it is now broadly recognized that over the 20th century, the atmospheric concentrations of key greenhouse gases, particularly Carbon Dioxide have been amplified by human activity. Australia can be held accountable for around 1.5% of global greenhouse gas emissions. However, Australia is one of the largest carbon polluters per capita, sitting around 24.4 tonnes per person.

Much policy discussion about climate change suggests that surplus carbon emissions are the result of failure of the market. Since the ongoing costs of environmental degradation and climate change are not internalized in pricing fossil fuel; a commonsense (and widely flavored by policy makers in the international community) economic solution is to internalize the cost of carbon emissions. Cap and trade emissions trading schemes have proven largely popular in the global policy-making community, as they enable market flexibility and allow for international targets to be met.

The problem with incentive-based economic mechanisms is that it is optional by nature. Relevant parties ‘opt in’ to the free market mechanism, rather than being required to participate in a policy based mechanism. The latter however,
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