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In the year 2011 the labour Government had introduced the Carbon Tax policy which is also popularly known as Carbon Pricing. This policy was in action till 2014 when the Government replaced the former carbon tax policy by the Emissions Reduction Fund. The tenure of the carbon tax policy was very short and that is why the result was not up to the mark and there were no big investments. The main motive behind the initiatives of the carbon pricing or carbon tax policy was to ensure environment free of pollution with minimal reduced emissions. The target that was set to reduce or to eliminate the emissions of carbon by the year 2020 was decided to be achieved by the purchase of the emissions of the carbon. In order to enhance the plans of action the carbon tax policy had been replaced by Emissions Reduction Fund. The coalition Government Emissions Reduction Fund aims at achieving the decline in the emission as low as 5% or less than 2000 by end of 2020. The former carbon tax policy and the Coalition have the same purpose of achieving the target with different thoughts and mechanism. In the Carbon tax policy or carbon prising the polluters have to pay the amount for the emissions and this acted as a motivation to reduce the level of emissions while on the other hand under Coalition the employers would invest only into those projects that would assure the reduced emissions. The government has found this Coalition to be more effective and cheaper mechanism to reduce the emissions rather than tax for the electricity (Abc, 2014).
The linking of European Union with the Emissions Trading Scheme would be beneficial. The characteristics of the cost on the basis of region would fetch welfare to the economy. The members of the EU would be benefitted by the elimination of the losses in regulating the emissions. This would also benefit the non members of the EU. But the competition is expected to be increased among the non members from such link. If the initial price of the carbon is higher in the NU ETS then the buyers would lose as they try to run cost effectively. This would on the other increase the production level also that would also be beneficial. The buyers would compare the prices of the carbon as charged by the seller with that of the market. The trading of the permits of the emissions is initiated to put a ceiling on the level of emissions of the carbon. The net gainers would not gain from such higher cost. The net sellers of emissions permit would contribute to the control of the emissions. But the net buyers would not gain much as there are certain costs of economy that are also included in the prices of the carbon so if the initial price of the carbon is higher that would not be beneficial for the net sellers as they have to pay the economic costs (Ieta, 2015).
Abc, 2014. Carbon tax: a timeline of its tortuous history in Australia. [Online] Available at: http://www.abc.net.au/news/2014-07-10/carbon-tax-timeline/5569118 [Accessed 16 September 2016].
Ieta, 2015. EUROPEAN UNION AN EMISSIONS TRADING CASE STUDY. [Online] Available at: http://www.ieta.org/resources/Resources/Case_Studies_Worlds_Carbon_Markets/euets_case_study_may2015.pdf [Accessed 16 September 2016].
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