Domestic and International Carbon Offsets under the Carbon Pollution Reduction Scheme: What Prospects?

Abstract:     
This article assesses the prospects for liable entities under Australia’s proposed Carbon Pollution Reduction Scheme (CPRS) to rely on international and domestic offset credits. This is crucially important for liable entities as, under the CPRS, they must surrender a permit for every tonne of carbon dioxide equivalent emitted. The only alternatives to surrendering permits are to purchase and surrender allowable offset credits, or undertake verified abatement action. From a liable entity’s perspective, much will depend on the price of permits, the price of offset credits and the cost of abatement action. The Clean Development Mechanism and Reducing Emissions from Deforestation and Degradation are considered as are proposals by the Garnaut Climate Change Review for international sectoral agreements.

Number of Pages in PDF File: 21

Keywords: international and domestic carbon offsets, Australia’s proposed Carbon Pollution Reduction Scheme, the Clean Development Mechanisms, Reducing Emissions from Deforestation and Degradation, international sectoral agreements, Garnaut Climate Change Review

JEL Classification: K10, K30, K32

Accepted Paper Series