Project outline
This project is funded through an ARC Discovery Grant. The aim of the project is to investigate the nature of policy instrument interactions and the implications of uncertainty for designing climate and energy policy mixes.
Australia faces daunting energy and climate change challenges as it enters an unprecedented era of policy developments, particularly with the introduction of a carbon pricing scheme. In an already crowded policy environment there is a critical need for understanding how these instruments will interact and how to deal with the inherent uncertainties surrounding the various policy options.
Part of the project investigates the rationales for multiple policy instruments and, in particular, understanding the justification for complementary policies in the presence of a carbon pricing scheme. The later should, in theory, solve the carbon externality market failure, making other instruments redundant and potentially distortionary. Having a more nuanced understanding of the various market and system failures associated with the climate and energy sectors can provide for a more informed debate on questions such as whether we should continue having a renewable energy target.
Such analysis also requires having a better understanding of the manner in which policy instruments can interact, which may be mutually reinforcing or work against one another. A particularly interesting case-study is the possible effect of emissions caps on discouraging voluntary action associated with non-economic motivations such social responsibility.
Climate change and energy policy making must always confront a wide array of scientific and socio-economic uncertainties and a ‘robust’ policy mix is often considered desirable. However, there is less agreement on what robustness means and the implications it has for climate change strategy. Another aim of the project is to review the concept of robustness, examine the tools and frameworks for robust decision-making, and propose a number of strategies for incorporating greater robustness into climate and energy policy.
Partners
ARC Discovery Project DP1096268 2009-2012
UNSW Research Project Team:
Dr Regina Betz – Principal Investigator
Assoc Prof Iain MacGill – Co-chief Investigator
Dr Paul Twomey – Research Leader
Dr Rob Passey – Senior Research Associate
Martin Jones – Researcher Assistant