Designing emissions trading scheme for the transport sector: solutions and outcomes

The recently published Green Paper expresses firm Government position that the future emission trading scheme (ETS) in Australia should have as broad as possible coverage in order to achieve maximum effectiveness and to guarantee the lowest emissions reduction cost to the society. The latest reaction of the trucking sector regarding broad sectoral coverage of scheme suggests that transport emissions are very likely to be covered from the future carbon pollution reduction scheme (CPRS). This paper considers possible designs and scenarios for coverage of transport emissions by emissions trading scheme and it contributes to the very current discussion for Australian policies regarding greenhouse gas (GHG) reductions. The first section of the paper discusses the possible designs for transport coverage by ETS by analysing possible variations for ETS parameters such as emissions coverage, allocation method, and choice of trading entity. This section evaluates the appropriateness of different ETS models for Australian conditions. The second section discusses the impact of ETS on the transport sector. The conclusion suggests whether ETS should be part of policies for transport emission reduction. (a) For the covering entry of this conference, please see ITRD abstract no. E217541.