Australia’s top economists back carbon price, say benefits of net-zero outweigh cost

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

A carbon price broadly reflecting the marginal costs of CO2 emissions is the most efficient way of proceeding. Informed businesses can then make environment efficient decisions. However, and this is a significant caveat, the price must be in place, and expected to be in place for 10 to 20 years, along with regulations indicating how it may change over time. This could be supported by some government subsidies to encourage development of new technologies. But these would be supportive, not prime, policies and not deter private firms responding to market signals. Over the last 10 or so years, government has shown itself to be hopelessly inept at developing or supporting carbon reduction technologies. Making government the anchor of such developments would likely lead to slow and inefficient outcomes.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australians will not only benefit from reducing environmental harm from global warming, but from participating in the development of new technologies that have substantial potential to generate income and create jobs (e.g. green hydrogen, energy storage and home energy conversation). A broadly applicable policy, such as having a price on carbon, offers the widest possible incentive for developing new technologies that may not have yet been conceived.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australia is the third largest contributor to CO2 emissions if scope 3 emissions are included (those that arise further downstream by countries who use our coal and petroleum products). So meeting our scope 1 and 2 zero emissions is a very minimal demand. The problem is global, and the only way to deal with it is carbon pricing in all countries and border equalisation taxes. Australia will be hit by this anyway, so we need to accelerate adjustment now via carbon pricing rather than be crippled later on.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australia risks being left behind and penalised by other nations who are pursuing a net zero target if we continue to drag our feet on addressing climate change. An economy-wide carbon price is the most efficient way to reach this target. Unfortunately in Australia this has become an irrational political battleground. The other measures are considerably more costly and will burden the budget at the expense of other, valuable social spending. Carbon capture technologies are often poorly regulated and unlikely to be able to be employed at sufficient scale to achieve net zero.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

All of these responses are useful and need to be considered in tandem. What could also have been mentioned is the value of the reduction of subsidies to the fossil-fuel industry.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price would provide the incentives -- and mechanisms -- for initiatives to reduce emmissions through new technology as well as government and direct action policys to subsidize emissions reductions.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Government agencies have an innate capacity built around the big picture outcomes, as they rightly should, especially at the federal level. This is largely why they have a very bad track record for picking localised winners in almost every policy domain that intersects with these types of questions. The less federal governments choose to involve themselves with the technical aspects of the alternatives at a micro scale the better - set the incentives and let those closer to the technology make the choice. That will both save taxpayers money and deliver a better outcome for energy consumers.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Benefits to Australia of transitioning to net zero: (1) to be on the right side of history, fully participating in a global effort to reduce carbon emissions and avoid catastrophic levels of global warming (2) Australia's resources and natural advantages in solar, wind and geothermal energy could position us as global leaders in green steel and other manufactured products (3) avoidance of the economic and human cost of natural disasters, drought, degradation of natural assets such as the Great Barrier Reef, and higher insurance costs. Why a carbon price: this provides the clearest signal to the market to "develop and roll out emissions-reducing technologies" including negative emissions technologies. Carbon pricing failed politically a decade ago. With better communication about (1) the recycling of the revenue (2) the urgency of the need to reduce emissions, and (3) the need to be seen globally as an active participant in achieving net zero I am hopeful that it could be more successful in the 2020's.

Government support to develop and roll out emissions-reducing technologies

Disagree

While most countries will commit to net zero by 2050, compliance with this commintment is likely to be limited, as it has been previously. As long as China fails to curb carbon emmissions, global efforts will have the characteristics of a classic Prisoner's Dilemma.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australia is a country rich in renewable energy sources - we have the space and conditions for wind and solar farms - which are likely to create more jobs (maybe not as well paid) as in current technology mines, and jobs that will not only be there in the setup phase but also in maintenance. There is much to be gained once we have a clear target. This is on top of the argument that the alternative would expose us to carbon tariffs (or other countermeasures) of major trade partners reacting to a delay in Australian carbon reductions. And, not surprising, as an economist I believe price signals are by far the most effective way to achieve the reductions, by increasing the cost of (avoidable) carbon emissions and providing incentives for innovation and technology development. A well designed system may even open up opportunities for a double dividend - using the revenue from the system to offset other distorting taxes, or using it for the support of R&D and/or education to get Australia future ready, or offsetting inequality in the effects of the policy on different groups in the Australian society.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

To be clear, these policies are to large extent complementary, if I could I'd pursue some version of all of them.

Support for negative emissions technologies that draw down carbon dioxide from the atmosphere and store it

Agree

Australia has a clear comparative advantage in carbon removal through such practices as reforestation, storing carbon in soil, savanna burning. Australia can also be a major global producer of zero-emissions hydrogen, which can be exported directly or used domestically to produce green steel. If Australia transitions to zero net emissions by 2050 it will be in a position to utilise that comparative advantage for domestic jobs and prosperity while also contributing to global emission reductions. If zero net emissions by 2050 were achieved that would mean only that humankind was no longer adding carbon to the atmosphere - but would not be subtracting it either. Yet there is already too much carbon in the atmosphere. So the process of decarbonising would have only just begun in 2050. Carbon removal is imperative if we are to succeed in limiting human-induced global warming.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Of course, there's no more likely to be an economy-wide carbon price than I am to step in thylacine droppings on my front lawn of a morning ? the views of such bastions of economic policy orthodoxy as the OECD and the IMF notwithstanding. So in the absence of the 'first best' policy, it's a choice as to what represents 'second best' ... and I am inclined to think that, of the three alternatives given here, the 'least worst' is direct action policies to subsidize emission reductions in the short-term ? but support for emissions-reducing technologies will probably do more good over the longer term: we might need to do both in order to meet 2030 as well as 2050 goals.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Disagree

The reason that achieving net zero is sold as the right thing to do is its alleged connection to reducing the pace of climate change. Even if this benefit is real, it would not accrue to Australians due to Australia's own consumption and production choices, because Australia accounts for such a small portion of anything global, including emissions. If we decided not to dig up and sell coal to the Chinese anymore because we don't like how they burn it, someone else would sell to them instead, so nothing would be gained that way either other than a "clean conscience" (pun intended). Leaving aside that most frequently cited alleged benefit, if transitioning to cleaner energy options like solar and wind were economically appealing at the moment, then if markets were operating competitively, businesses would discover that off their own bat, and everyone would be better off (and that is already happening, to an extent - although heavy concentration and corruption in the resource-extraction industries is an impediment to this process). This poll, however, expects government to get involved, at cost, to speed up the process of transitioning Australia away from industries in which we have clear competitive advantages, like coal, to industries where our comparative advantage is less mature. We may have potential comparative advantages in things like solar power and maybe wind, but first it's unclear whether the whole-of-system impact of such technologies is actually "cleaner" than coal, and second it will take time and be costly in money and welfare terms to develop these now rather than letting the market discover their potential. Other countries have already gotten head starts over us in a number of such technologies, making the benefit to Australia even less clear. On the plus side, there may be some direct benefit of pushing for an earlier-than-"natural" transition in terms of cleaner local air, although I doubt this benefit would outweigh the costs from a significant action by government, leading me to disagree with question one. However, i would add two big caveats: (1) if we were to start investing in nuclear power, with a plan to transition to it entirely by 2050, i do think that decision would deliver a net benefit for Australia over a long enough time horizon, and hence my answer would change. The nuclear option seems so politically unpalatable that i have assumed it's not what Q1 had in mind as a mechanism. (2) if government action in this area were to significantly disrupt some of the rent-seeking going on by the powerful companies in the resource extraction industries of Australia and replace it with more competition, this would be expected to increase Australian welfare. Again I am assuming that would not be an outcome of the government action being envisioned to "achieve net zero". On Question 2, if we are to do something, a market-based system like cap-and-trade would be my pick. It allows the nomination of a specific "acceptable" level of pollution, making the trade-offs clearer than in the case of direct subsidies; it creates a situation where the companies for whom it is most costly to switch to cleaner sources are the ones to whom the right to pollute is allocated, unlike direct subsidies; and it has been used successfully in the past to deliver lower emissions and thereby cleaner air (which would be the main benefit, rather than climate change mitigation, for reasons outlined above).

.

Disagree

Re Q1. Taking a global perspective, ideally a welfare maximising reduction of greenhouse gas pollution would equate marginal abatement cost with the marginal external cost of climate change net of adaptation marginal costs. It is not clear that the global optimum involves (a) zero emissions and (b) then a zero target by 2050. Then, from the Australian perspective, it's okay to follow the global optimum if there is a cooperative agreement across the globe. But, and as seems likely, if significant greenhouse gas emission countries lag and/or do not meet the agreed global target, Australia following the target would involve a net cost with marginal cost to Australia exceeding marginal benefit to Australia, unless offset by utility for feeling good. Re Q2. Because there are multiple sources of market failure in reducing greenhouse gas emissions, multiple policy interventions with different attributes need to be invoked to reduce emissions at lowest cost. A carbon price on a comprehensive greenhouse gas emissions base, either a tax or an emissions trading scheme, provides incentives for most business and household producers and consumers across the economy to find the least cost ways to reduce pollution. And, most of the revenue windfall can be recycled as direct payments to households to offset the regressive effects of the carbon price. But, this carbon price model assumes rational decision making by all. The behavioural economics ideas of short termism, attraction to current decision choices, and so forth reduce the effectiveness of the carbon price policy, and open the door for regulations on energy efficiency of motor vehicles, household appliances and some business production methods. Technical change for less greenhouse gas emission intensity production and consumption methods, Greenhouse gas emissions capture and so on requires much research and development and its adoption. These search and development activities involve large external benefits, and arguments for government support via own funded research, subsidies for private funded search and development, and patents on new inventions.

Government support to develop and roll out emissions-reducing technologies

Agree

Australia could be a solar powerhouse by 2050, exporting energy intensive products here that replace high-carbon products elsewhere. This could replace the coal industry and much of the local fossil-fuel energy production. For that transition to happen, the technology of solar and storage of solar needs to further improve and get cheaper, which will depend on international R&D of which Australia is a tiny amount (so not in our hands). The main thing we can do is to set up the infrastructure for huge solar farms, which is a regulatory issue. Another thing is to get into strategic partnerships with the large firms and research institutes at the forefront of developing solar and those that use intermittent solar energy for industrial purposes. Carbon prices, direct action, and carbon-extraction, have so far proven to be magnets for political corruption, totally useless when it comes to actual carbon-emissions. We should not fall for the hot air of those who lobby for them.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australia needs to join the global effort to reduce the effects of climate change as the world is transitioning to a carbon-neutral world with or without us. Australian?s will be better off if the government actively manages this process by assisting communities affected as global demand for Australia?s exports changes. The emerging structural change will happen regardless of domestic policy settings. There are enormous opportunities for businesses and workers to develop new export markets such as renewable energy and critical minerals needed in new technologies. If we decide not to manage this process ourselves, our trading partners will likely ensure that we contribute to net-zero by imposing trade sanctions on Australian products. The imposition of tariffs is not desirable for Australian businesses or consumers.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

All the policies mentioned would need to be part of the tool-kit to achieve net zero by 2050. An economy wide carbon price is particularly important. The Australian carbon price scheme introduced in 2012, (and abolished in two years) should have been continued. If it had, we would be in a better place currently in terms of being closer to achieving emission targets. If we want to reduce the use of fossil fuels, we have to change relative prices: make it more expensive for people/industries to use gas and petrol wastefully. A carbon price is also perhaps the cheapest way to achieve net zero.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Global action to reduce carbon emissions will adversely affect Australia?s terms of trade and the cost of imported capital, lowering our living standards, unless we respond. Economic transformation will occur in any case as relative prices change but policies designed to promote transformation in advance of these developments will mitigate our potential losses. Such policies will also encourage the search for new opportunities in a world where carbon-intensive activity will add progressively less, and eventually negative, economic value. A tax on carbon emissions or an equivalent cap-and-trade scheme is the most efficient policy intervention to encourage consumers and producers to decarbonise their economic choices.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

The mantra of "technology not taxes" is a false dichotomy. Technological solutions (marine net emission technologiess, green energy, and others) and a price on carbon are complements not substitutes. We need a price on carbon to drive development and adoption of technologies, and we need technological innovation. Ultimately, decarbonising the economy is about internalizing a negative externality. And, just like with COVID-19 vaccinations, externalities require government action...as every sensible economist knows.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

The costs of inaction on climate change are immense. The figures vary, but they are all large: one study puts the long term costs from acute and chronic changes at $94bn per year by 2060 (DAE, 2021), and another at $129 billion by 2100 (Kompas et al, 2020) or 1.5% to 2% of GDP. Other economic losses will result from carbon border tariffs and, as pointed out by the Treasurer recently, a rising cost of capital. The one-off impact of a carbon price ? the most efficient means to get to net zero ? is a tiny proportion of those costs. Estimates suggest 1.5% of GDP, but this can be at least partially offset by stimulating carbon-neutral investments using funds currently subsidising fossil fuels ($10bn in 2020). A combination of policies is needed and a carbon price is politically very hard for Australia, so we may well take a less effective path, but it's better than no action at all from an economic, social and environmental perspective.

Government support to develop and roll out emissions-reducing technologies

Agree

Government support to develop and roll out emissions-reducing technologies

Agree

A carbon price or tax is the most efficient way to encourage emissions-reducing technologies, as it would encourage development of such technologies by the free market. This is preferable to letting the government decide which technologies to invest in, or which emission reduction projects to support via "direct action" policies. It seems odd that a liberal government that claims to be market oriented prefers the "direct action" subsidy scheme over simply setting a carbon price and letting the market work, but that decision is based on politics rather than economics.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Using the price mechanism will always ensure a more efficient allocation of resources than the government attempting to second-guess the market. If the market on its own has unacceptable social impacts then these can be offset by increased government support to help people make the transition to a low-carbon world.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Uncertain

Ideally we would have more solid evidence and analysis to the questions of how much carbon dioxide emissions contributed to global warming over the last century, and where the climate would be headed with and without net zero by 2050. But overwhelming offshore pressures, eg damaging trade barriers, may well force us to commit to net zero before these questions have answers. Alas, we have ruled out nuclear energy, thereby over-constraining the problem of ensuring reliable and affordable power. We should avoid free-riding on benefits that may be conferred on us by others that go to net zero. On the other hand, we could end up making the sacrifices entailed by going to net zero in a world where various countries emit much more carbon dioxide than us while giving little more than lip service to that objective.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Uncertain

There has not been sufficient national debate to ensure we know exactly what is involved in Australia transitioning to net zero by 2050 . I support a national market in carbon prices as long as next generation nuclear energy is available as a potential generator of Australian electric power .

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Uncertain

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Disagree

I am presuming the question is whether there will be a net macroeconomic benefit in terms of GDP and employment. The answer to this empirical question should be based on credible modelling. Previous studies of the impact of significant emissions reduction (eg Brian Fisher 2019) show future GDP and employment losses to varying degrees, depending on the modelling assumptions. However, given the time frame and great uncertainties involved, even a rough estimate may well be unpredictable, so I'm borderline uncertain on this. Surprise technological breakthroughs and/or adoption of nuclear power in the next three decades would likely minimise previously estimated losses. Other studies (eg Deloitte 2021) suggest the macroeconomic cost to Australia of not doing enough to address climate change could be catastrophic because climate change will impose very high economic costs in the future. But this is a separate issue. Estimates of the future macroeconomic cost of (i) reducing emissions to net zero and (ii) of climate change itself, should not be conflated in formulating policy. Just as we assume Australia is a small open economy unable to influence global economic conditions, so it is with climate change. If Australia eliminated its under 2% contribution to global emissions, it would make next to no difference to the future climate, whatever that may be. Significant global reductions will obviously depend on what the major emitters do, including China and India, not what happens here.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australia is at particularly high risk from damages from climate change: from increasing severity and frequency of bushfires to coral bleaching of the Great Barrier Reef, one of the country's most unique and valuable natural assets. Although Australia could possibly free-ride on the efforts of other larger economies, it would suffer disproportionately if other countries chose to do the same. Furthermore, Australia benefits when it diversifies away from an economy based on natural resource extraction to one more fueled by the development and adoption of new clean technologies. An economy-wide carbon price is the most direct and effective way of achieving a net-zero goal. It can be coupled with direct transfers to help lower-income households face higher costs of essentials like power and transportation (even though most carbon prices being discussed would actually only modestly increase those). A carbon price would favor green energy while also discriminating between sources of dirty energy that varying degrees of dirty. And it would also provide incentives for carbon capture and sequestration.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

To achieve net zero emissions Australia will need to follow a portfolio of policies that change the incentive to emit greenhouse gases. As outlined in Jotzo F. and W.J. McKibbin (2021) ?Low Hanging Fruit in Australia?s Climate Policy? in Caselli, f., A. Ludwig, and R. van der Ploeg(eds) ?No Brainers and Low Hanging Fruit in National Climate Policy? pp 93-104. CEPR Press, London: "six areas where climate policy in Australia could achieve emissions reductions at low cost: pricing emissions in industry through a modification and broadening of the existing Safeguards Mechanism; investment in assisting the transformation of the electricity grid to very high shares of renewables; a mixture of innovation support, and targeted incentives and regulatory standards in specific sectors and activities; an effective green infrastructure program to stimulate demand and raise productivity in the medium term; a community focused structural adjustment fund that would enable disproportionately impacted communities to adapt reality of the global transition to net-zero emissions by 2050; and removing impediments to the emergence of new renewable energy-based export industries to take the place of coal and gas exports". Key to the carbon pricing is a credible rising price on carbon (preferably through a Climate Asset and Liability Mechanism rather than a carbon tax ) (see Academy of Social Sciences in Australia (2020) ?Efficient, Effective and Fair: Climate Policy in Australia?, Discussion Paper June). https://socialsciences.org.au/publications/efficient-effective-and-fair-discussion-paper/ ). Also important is a large scale green infrastructure program ( see Jaumotte, F., Liu, W. & McKibbin, W. J. (2021). Mitigating Climate Change: Growth-friendly Policies to Achieve Net Zero Emissions by 2050. IMF Working paper wp2021195 https://www.imf.org/en/Publications/WP/Issues/2021/07/23/Mitigating-Climate-Change-Growth-Friendly-Policies-to-Achieve-Net-Zero-Emissions-by-2050-462136

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

The question assumes that we have the option of not transitioning to net-zero and free ride on other countries. The significant negative consequences of not transitioning to net zero (by 2050 or somewhat later) makes the question somewhat irrelevant. For example, research that looked at the impact of climate change on the US economy suggested that annual GDP per capita reductions (as opposed to economic costs more broadly) could be between 1.0 and 2.8 percent under the Intergovernmental Panel on Climate Change representative concentration pathway 2.6 (under this scenario emissions peak in 2020 and then decline through 2100), and under pathway 8.5 (emissions rise continually through 2100) the range of losses could be between 6.7 and 14.3 percent. For context, a 5 percent U.S. GDP loss would be roughly $1 trillion. We have a small, very open economy, which is much more subject to the vagaries of the global economy than the US economy, and Australia's changing climate constitutes a very significant challenge. We have already experienced increases in average temperatures over the past 60 years, with more frequent hot weather, fewer cold days, shifting rainfall patterns and rising sea levels. More of the same is expected in the future. On the second question, of course I would like to see an economy-wide carbon price, which we know is the most appropriate instrument. A more relevant question, however, is which of the inferior alternatives would be preferable. A combination of direct action and targeted R&D subsidies would likely get us there, albeit at a higher cost.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Uncertain

Whether "Australians will likely benefit overall" clearly depends on which policies are enacted to achieve the goal (i.e., a carbon tax is clearly much more efficient than subsidizing/rewarding polluters to reduce emissions) and if Australia's participation in the process is part of what leads to a coordinated global effort to reduce emissions.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Disagree

Reducing emissions is a public good game played globally. It is necessary for a country like Australia to play its part to support the global effort to limit emissions. It is a priori unlikely that reducing emissions in Australia will benefit Australians directly (though not impossible via technological progress and reduction of local pollution). But Australians, are and will be impacted by global warming if nothing is done globally.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Why 2050? Influential countries are demonstrating leadership by thinking about 2030 commitments. Australia could and should be a leader in this space.

Government support to develop and roll out emissions-reducing technologies

Agree

1. Australia will benefit greatly if the world reaches net zero by 2050 with cumulative emissions sufficient to keep warming well below 2 degrees. We could attempt to free ride on the efforts of other countries by doing little to reduce emissions. However, we would almost certainly face a range of costs from being perceived as climate cheaters 2. As to the best measure, this is difficult. I would favor direct action in the literal sense of action by government to invest in renewable electricity generation, expand the grid and so on. However, Direct Action in Australian policy parlance means the ineffectual subsidy policies introduced under the Abbott governmet Negative emissions tech will probably be necessary in the end, but they aren't a relevant option today A carbon price is the best option, and one we actually had in place, but it's too late now for a purely price-based approach, even assuming there was any political possibility On this basis, I favor government support to develop and roll out emissions-reducing technologies

Government support to develop and roll out emissions-reducing technologies

Agree

It is frustrating to watch Premier Morrison and his government not firming up their commitment to achieving net-zero emission by 2050 and even more frustrating to note their assertion that Australia will continue to mine and sell the fossil fuel overseas well beyond 2030. Australia has the means, resources, and expertise to move closer to the net-zero emission target. What is lacking is the ?political will?. In some areas, Australia is attempting to take the appropriate actions, such as the move towards cleaner energy and take-up of electric motor vehicles. However, we are moving at a snail phase, and we are nowhere near closing the net-zero emission gap by 2030 or even 2050. Political decision-makers need to understand and educate the general public that we need not compromise on economic growth to solve the climate problem. Economic and environmental performances can go hand in hand where the environmental policies and the progress towards investing in negative emission technologies can be important drivers of economic growth for Australia. Taking a strong stand on emission reduction by 2030 is not sufficient. Government should play a significant role in the continued innovation of emissions-reducing technologies to secure investment for their development and market uptake. Though the measures to develop and roll out these technologies seems like a massive challenge, the costs of not acting can be way more expensive in the long run. Environmental scientists are continuously warning us, and in the past few years, Australia did experience many catastrophic events.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australia will benefit from shifting to net zero greenhouse gas emissions by 2050 (actually, it needs to be faster than that to help the world to avoid major damage from the changing climate). But this does not mean that the shift will be costless. Currently, 94% of all energy used in Australia comes from fossil fuels (including energy used in transport, agriculture, manufacturing, mining). The shift to net zero will require replacing one whole energy system with another. This is a huge task. The main benefit will be reduced harm to the climate. But since the harm that is currently being done is an externality that is not measured in GDP, the removal of this harm will not appear in the national accounts as a benefit. Australia will also benefit from being extremely well placed to meet the global demand for zero emissions energy, exported directly or embodied in energy-intensive products. As Ross Garnaut put it so well, Australia can become a renewable energy superpower. On the second point, there is no single policy that can or should do all the work to reduce emissions. But if we want to manage this enormous challenge in the most cost-efficient way, then we must stop permitting enterprises from being able to emit greenhouse gases without limit and without cost: there must be either a price or a tax on emissions, to reflect the external damage that they do. A price/tax would provide enterprises with a direct incentive to search for ways to reduce emissions; it would harness the energy and ingenuity of the market to find new ways to produce and new products that are low or zero emissions (by making it profitable to do so); it would be efficient, as the lowest cost forms of abatement would be identified by enterprises and adopted first; it would draw on decentralised knowledge and decision making by enterprises, guided by the price/tax, rather than rely on the directions of (necessarily less-informed) government; it would hasten the adoption of new technologies and thus be a stimulus to innovation--it is only when they are adopted that they actually reduce emissions; and it would not have to be paid for by the taxpayer, except to the extent that they emit greenhouse gases.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide price on carbon is a ?market mechanism? approach that will steer the economy towards a reduction in emissions in the most economically efficient way. This approach places the ?costs? of pollution onto the businesses that are least effective at reducing emissions. This provides the incentive for all businesses to look towards the most efficient and effective technologies that will, over time, lead to a reduction in overall emissions. It has been proven to work: https://theconversation.com/carbon-pricing-its-a-proven-way-to-reduce-emissions-but-everyones-too-scared-to-mention-it-132342 The other policy options listed here have the potential to reduce emissions but come with risks. We need to apply a critical lens to the types of technologies that the government is proposing to support, and scrutinise where is the evidence that they will lead to a reduction in emissions, and on the scale required? Direct action policies come with the risk of the government simply ?picking winners?, and backing policies that are not necessarily the most effective way to reduce emissions, but are instead influenced by business lobbying. Government support to develop and roll out emissions-reducing technologies can spur on the innovation process, but does not guarantee that businesses will be incentivised to adopt these technologies and that emissions will actually fall. The benefits of the government support might simply be privately reaped as commercial subsidies by the companies involved. Government support to develop and roll out emissions-reducing technologies (Carbon Capture and Storage (CCS)) sounds promising and has been endorsed by the World Economic Forum https://www.weforum.org/agenda/2020/12/carbon-capture-and-storage-can-help-us-beat-climate-change/ But we need to be wary about the technologies that the Australian Government is proposing to support. The Climate Council has raised concerns about the expensiveness of CCS compared to investing in renewable energy sources, and has identified that CCS could never deliver a zero-emissions solution because it doesn?t deter fossil fuel industries from continue to burn these fuels. Their emissions just get buried underground, with a non-zero change of leakage. Furthermore, the Climate Council has also reported that the processes of capturing, storing and transporting emissions involves using more fossil fuels, meaning that CCS is currently a net positive emission technology https://www.climatecouncil.org.au/resources/what-is-carbon-capture-and-storage/ Even though we have economic and scientific evidence on what works to reduce carbon emissions, policy choices and implementation will inevitably become a political issue. In the debate between ?technology vs. taxes?, a clear communication strategy is required to explain to the public how a market mechanism approach works, so that rational discussions do not get derailed by political scare tactics over ?a great big new tax?. Better levels of economic literacy among the general public would help too. Scrutiny also needs to be applied to the proven effectiveness of the technologies that the government is proposing to support. It needs to be asked: which businesses and industries in particular stand to gain from the government?s choice of which technologies to back. The suite of technologies in our economy's future needs to include not just those that reduce the carbon emissions of carbon-intensive industries, but also technologies that facilitate the use of renewable energy sources to replace dependence on fossil fuels. Market mechanisms can contribute towards this process.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Uncertain

The proposition in Q1 is not sufficiently defined to permit a ?yes? or ?no? answer. Do we mean ?better off? in terms of per capita GDP or in welfare terms? Do we mean ?better off? in the year 2050 or in the future following 2050, appropriately discounted? Moreover, there are several possible pathways to ?net zero?. Some entail relatively modest costs; some entail very high costs. Some offer significant co-benefits in addition to reductions in CO2 emissions; some offer relatively little by way of co-benefits. In any case, the aim of this exercise should be to ensure a functioning and flourishing world economy in the twenty-second century and in the centuries to come, and to do so as efficiently as possible ? rather than to persuade ourselves that we will be ?better off? on every possible indicator in 2050 as a result of the announcements we make in 2021. As to the means to be adopted... In several contexts and capacities ? including especially as a member of the Evaluation Council of France?s Green Bond programme and as a participant in the discussions leading to the launch of the European Union?s ?NextGenerationEU? Green Bond programme ? I remain committed to exploring innovative means of tacking climate change and innovative ways of funding these means. Nonetheless, it remains true that the most efficient or ?least-cost? means of achieving the requisite reductions is through an economy-wide uniform carbon price, one that permanently incentivizes producers and consumers in every sector to seek less carbon-intensive solutions to their needs. There is an extensive, and regularly updated, database of evidence on this point available at https://www.oecd.org/environment/ I am aware that the Australian electorate implicitly rejected carbon pricing in the 2013 Federal election. But this does not mean that it is bound to reject carbon pricing for the rest of time. The electorate implicitly rejected the GST in the 1993 election but accepted its introduction seven years later. Eight years on from the 2013 election, it is perhaps time to revisit the issue of carbon pricing. If all major political parties in Australia are to commit themselves to ?net zero?, the electorate should surely be given the option to pursue this aim with the least-cost means available.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

The great fear of opponents of carbon-reduction policies is that Australia's economy will suffer permanently. Thus, the key challenge for Australia will be to find ways to decouple energy-related emissions from economic growth. The good news is that many countries worldwide have already achieved this (eg Sweden, Denmark Germany, UK, even the US). Countries that transitioned to cleaner modes of economic activity have used multiple policy tools to induce a shift. I would like to highlight one of them: Emission trading schemes (ETS), one of many tools to price carbon. Coming from the tradition of Rhine capitalism, I consider ETS the most desirable pricing mechanism. Almost 40 countries in the world (including the European Union & UK) and over 20 sub-national jurisdictions have implemented such schemes. Their benefit is that they are the least invasive policy tool and businesses prefer it (over eg carbon taxes) because they give them financially and operationally more flexibility. It is unfortunate that Australia abandoned a long-planned national ETS in 2013 after a change in government. From an economist's perspective, a reintroduction of the ETS would be the single most important "first step" for the Australian government to achieve "net zero by 2050" without compromising economic growth. ETS would create the right institutional framework and incentives for businesses to move away from carbon-intensive industries and reduce the industrial sector share of the economy. But I would like to highlight the importance of other government tools that can be used as second and thirds steps: Subsidies for businesses to invest in renewable energies and investments in low-carbon transport including electric vehicles and urban planning. Thus, "net zero by 2050" is a real opportunity to modernise and innovate. A desirable side effect -- that is rarely discussed in this context - is that many public health concerns (eg respiratory illness) will be mitigated too: cleaner air will cause less respiratory disease in our population-dense cities and fewer extreme heat days will save lives.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Uncertain

Net zero is a commendable and good ambition. However, the idea that it is cost-free is almost certainly a convenient fiction. An efficient tax which puts a price on carbon is the most efficient way to go, but when carbon-based energy is effectively to be banned, then it rather defeats the purpose of the tax. As a rich country with abundant space (solar is land extensive) and sun we can afford it. And, while coal might in time decline, demand for our other resources is only likely to rise. However, for the poor countries of the world which have large energy deficits, is the idea that they stay energy poor or become poorer? Where is the global objective of addressing poverty? Will Australia refuse to supply coal/gas to countries? I suspect the divide between rich and poor is going to widen substantially.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Price signals and trade are the basis for efficient pollution reduction.

Government support to develop and roll out emissions-reducing technologies

Uncertain

Government support for research and development of new technologies is critical for a country with large reserves of coal such as Australia.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

The price mechanism is a well-known and proven mechanism for getting many small and large behavioural and technological changes across the economy. People respond quickly to forces that directly affect their wallets. Subsidies and other forms of support for low emission technologies will support a transition, but will take a long time or a very large budget to be as effective as a price on carbon.

An economy-wide carbon price (either via a cap-and-trade scheme or an emissions tax)

Agree

Australia (and other countries) face huge costs associated with climate change. The types of climate shifts we are likely to experience if we do not limit warming to less than 1.5 degrees (the target that net zero by 2050 is designed to avoid ? although the emissions trajectory is also crucial) will be associated with more frequent and intense natural disasters, loss of agricultural output, reduction in workforce productivity from heatwaves, increases in health costs and mortality from natural disasters and heatwaves, property and land damage from sea level rise and impacts on the tourism sector. Australia will also have to manage waves of migration from vulnerable countries. The argument that we are only a small percentage of global emissions holds no water either ethically or in terms of establishing and implementing a global agreement. If rich countries like Australia won?t do their fair share this undermines the likelihood that others will take the actions needed. If Australia does insist on free riding in the short-term, we are likely to face substantial costs both through increases in the cost of borrowing (as investors factor in the risks of not acting) and through carbon-border tax adjustments on our exports. Given the pressure for action is only going to increase, waiting will require more rapid decarbonisation in future decades, much more costly and disruptive than putting in place policies to ?bend the curve? now. If we lag in terms of our policy settings, we are also likely to miss out on some of the benefits from being market leaders in areas like green energy and manufacturing ? areas of great future potential given our abundance of solar and wind resources. It seems almost redundant to say it (and depressing we still have to) but the best policy to help us reach the goal would be some form of economy wide carbon price. A market mechanism would allow business to reduce emissions in a way that minimises the cost across the economy. The "technology not taxes" slogan is vacuous and ignores the fact that price signals drive the incentive for technological innovation and adoption. Direct government action to reduce emissions costs more for a given level of emission reduction, and that is ultimately also paid for by Australians via higher taxes.