The Carbon Pricing Mechanism Of Australia And Its Implications For China

The trend of global warming has become increasingly evident.The main reasonaccounting for the phenomenon is emission of carbon dioxide and other greenhouse gases.As one of the most important rules for the implementation of this declaration, the KyotoProtocol explicitly provides for the Convention Appendix the indicators of total carbonemission of every country. In order to achieve the targets of emission reduction,manycountries have explored effective market economy means to control carbon emissions.Currently, China is one of the world’s leading emitter of carbon dioxide, and China’scarbon emission increases dramatically in recent years, so China is facing large pressure toreduce emissions. In addition, as the largest developing economy in the world, China willmake the economic growth target as a priority target in a very long period of time. ForChina,overcoming climate change will be a long-term challenge.Chinese governmentcommitments to reduce carbon dioxide emissions of every unit of GDP from40%to45%in December2009on the base of the level of the year of2005. In this context, how todesign the right policy framework to achieve the emission reduction targets is a questionneeded to be seriously thought about.Australia’s two-stage carbon pricing in the "Clean Energy Act", in which the price ofcarbon is fixed in the first stage, then establish carbon emission trading system in thesecond stage fully illustrates the coordinated relationship between carbon tax and carbonemissions trading system.The establishment and implementation of carbon tax system lay asolid foundation for gradual transition to a carbon emissions trading system. Australia andChina’s energy structure is similar.we can get some experience to design and operate ouremissions trading scheme in many respect. The experience of the Australian carbon marketbuilding is a good reference.Combined with China’s actual conditions, the implementation of carbon tax systemcan give us its advantage that its resistance is smaller compared to other tools in the short-term. But in the long term, the carbon emissions trading system has more conduciveto the coordinated development of China’s economic environment and integration into theinternational carbon market. The implementation of carbon tax in the short-term and carbontrading system in the long-term not only can reduce the loss of interest in internationaltransactions, but also can help us develop economy rapidly while participating in the newround of global carbon emissions. The author think the best choice is the implementation ofa carbon tax system in the short term while actively explore carbon emissions tradingsystem.Specifically, this paper includes the following four parts. The first part is thetheoretical basis including the principles of economics of carbon trading,carbon marketmechanisms,and market classification. The second part is Australia’s carbon pricingmechanism profiles. It includes the background of Australia’s carbon tax legislation,themain content of the carbon tax legislation and supporting mechanisms,potential risks andresponse measures,comparison with the EU ETS.The third part is the analysis of currentdevelopment of the carbon market analysis. It includes the status of the development ofChina’s carbon trading market, risks,related policies,problems,carbon pricing factors andanalyze how two companies negotiate a price on carbon trading with a simple cost-basedpricing model.The fourth part analyzes implications of Australian carbon pricing mechanismfor China. It includes necessity and mode selection of carbon tax, rate design and how toagainst the risk of a carbon tax, the total trading mechanism, the initial allocation, pricingregulatory mechanism, a clear legal properties to the right of carbon emissions,the marketprice control mechanism and increase the carbon tax propaganda.