OECD takes aim at direct action plan

The Abbott government's direct action plan to curb greenhouse gas emissions has copped another barb, this time from the Organisation for Economic Co-operation and Development.

The Abbott government's direct action plan to curb greenhouse gas emissions has copped another barb, this time from the Organisation for Economic Co-operation and Development.

The OECD study, "Effective Carbon Prices", found that emissions trading systems provided the lowest cost for reducing carbon pollution among the different approaches available. The report "shows that taxes and trading systems are preferable to other policies, such as feed-in tariffs, subsidies and other regulatory instruments".

The findings were in line with "textbook suggestions" that "trading systems and [broad-based carbon taxes] are the most economically efficient policy tools to mitigate climate change", the report said.

Policy choices were crucial, the study found: "The challenge facing the world community in relation to climate change is so enormous that it can only be achieved by applying policies that are as cost-effective as possible."

The OECD adds to other commentary supporting Labor and the Greens' policy of putting a price on carbon compared with the Abbott government's reliance on paying polluters to reduce emissions. A survey of 35 prominent university and business economists by Fairfax Media found only two preferred the Coalition's direct action plan over the existing carbon price scheme.

The Abbott government has vowed to repeal the carbon price scheme.

"The most effective, and the most affordable way to reduce our emissions is to impose a price on pollution like the one currently in place," said Greens leader Christine Milne.

"The OECD report is yet another endorsement to add to the voices of leading scientists, economists and businesses that support a market-based mechanism like emissions trading as the most effective and affordable way to reduce emission."

The OECD study examined climate change policies in 15 countries. It said carbon taxes were preferable to other policies in large part because they sent a signal, but that meant they were also more likely to draw political flak: "[The report] underlines that while the cost of carbon taxes is clear - which is why they are easy targets for political opposition - other policy instruments entail higher costs to society per tonne of carbon dioxide abated - in many cases, substantially higher."

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