Assessing carbon tax and emissions trading as policy options for climate change mitigation in Australia

The primary question explored by this thesis is what alternative, carbon tax or emissions trading, would be an optimal policy for climate change mitigation in Australia. This thesis focuses on assessing carbon tax and emissions trading policy options on the basis of multiple criteria related to climate change policy in the Australian context. The study analyses the issues of environmental degradation, policy responses to the climate change issue, carbon taxation and emissions trading as a theoretical foundation for addressing the research question. The weaknesses of common evaluation methods and practices in dealing with climate change policy are also critiqued. After reviewing policy evaluation methods, the study builds a methodological framework to assess the climate change policy options based on the multi-criteria and Delphi methods. To facilitate the evaluation procedure, the criteria necessary for the climate change policy evaluation are identified. This study employs the Delphi method to verify the evaluation criteria in the Australian context and to assess the relative importance of these criteria. The thesis also attempts to construct carbon tax and emissions trading policies for Australia using a combination of theoretical and practical considerations. Further, these two contrasting policies are qualitatively analysed with reference to the identified criteria to assess potential performance of the proposed carbon tax and emissions trading. The resultant evaluation criteria and performance ranks of each proposed policy option allows building a decision matrix which facilitates the final evaluation and selection of an optimal policy.The evaluation results reveal that the carbon tax policy constructed by this study outperforms the designed emissions trading in terms of many criteria. As a result, the carbon tax is identified as an optimal climate change mitigation policy for Australia. The results of this study also indicate that the emissions trading proposed by the Australian Government might be a misleading policy founded on biased assumptions. Based on these findings it is recommended that Australia reconsider carbon tax and emissions trading policies on the basis of well developed multiple criteria to obtain a justified and sustained policy solution