Labor's carbon price pragmatism

Under ideal circumstances the carbon pricing scheme would have been left to develop under the protective sheets of a price floor and ceiling. But political pragmatism dictates that today's move to link with the EU ETS is likely the right one.

The price floor in Australia’s permit trading scheme will be replaced with a binding limit on CDM emissions credits, coupled with early linking to the EU emissions trading scheme, the Australian government announced today. It means a common carbon price in Australia and the EU, from 2015.

In an ideal world, maintaining the price floor and linking later would have been the preferable. But with political pressure on the price floor and the carbon pricing scheme overall, the arrangement announced today is a good alternative.

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