Carbon trading = Carbon leakage?

The Australian Government has been recently discussing the implementation of a carbon trading scheme. The gist of goes along the lines of “the more carbon your company produces, the more you pay in a new tax that we are introducing”. The question that needs to be asked is: Will this cause companies to move offshore to places such as China, and continue production with an even greater carbon footprint?

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Published:: June 24, 2008 / 10:58 am

Category:: Politics

Tags:: carbon trading, ducks, environment, green, smokey fumes

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Dan 6.26.08 / 11pm

yes, carbon pricing schemes do cause a degree of leakage. but only in industries that are internationally competitive to the extent that the carbon price could influence the industry’s location, and there aren’t very many of those. aluminium and steel are the most likely candidates, and early indications from europe suggest that leakage even in these industries is not very significant.
direnc 6.27.08 / 1am

While that may be true, I would argue that these internationally competitive companies are indeed our biggest, and as such, produce most of the carbon emissions. Mass carbon emitters such as the aluminium smelting corps may find that extracting in Australia, sending offshore to smelt, then importing the finished product back may be viable. That being said, I think the more likely scenario would be a direct pass-on of the extra taxes they pay to the consumer.

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