Policy Options to Reduce Electricity Greenhouse Gas Emissions

Abstract

The design and effects of different schemes to reduce greenhouse gas emissions associated with the production and consumption of electricity are modelled. The tax scheme achieves the lowest cost per unit emission reduction because it encourages both businesses and consumers to reduce emissions, and the recycled windfall revenue can meet equity objectives. Comparing the Emissions Intensity Scheme (EIS), Clean Energy Target (CET) and Renewable Energy Target (RET) schemes with common government revenue neutral and emissions reduction design outcomes, the EIS provides better incentives to generators to find the lower cost per unit emissions reduction.