1 Submission to the Prime Minister's Task Group on Emissions Trading

1. This submission does not respond directly to the four sets of Questions for Consideration in the Issues Paper. Rather, it comments on some of the key underlying questions in the Paper, and mainly summarises arguments given at greater length in a December 2006 working paper, Pezzey, Jotzo and Quiggin (2006). However, the submission also does answer many of the Questions for Consideration, and adds a comment on the important topic of carbon leakage and trade-exposed industries. 2. After the recent history of government denial that emissions trading has anything useful to offer Australia as one way of achieving its contribution to the global abatement of greenhouse gas emissions, the vigour and detail of the Issues Paper is very welcome. However, the Task Group is hamstrung from the start by two central criteria in its December 2006 Terms of Reference. So it is inevitable that the comments below focus as much on these criteria, as on the Issues Paper. They are (with emphasis added): A that the Task Group is asked to "advise on the nature and design of a workable global emissions trading system in which Australia would be able to participate". B that the "major competitive advantages " that Australia "enjoys through th