The governance challenge for implementing effective market-based climate policies: A case study of The New South Wales Greenhouse Gas Reduction Scheme

• Published in: Energy policy Vol. 36; no. 8; pp. 3009 - 3018
• Main Authors: Passey, Robert, MacGill, Iain, Outhred, Hugh
• Format: Journal Article
• Language: English
• Published: Oxford Elsevier Ltd 01.08.2008; Elsevier; Elsevier Science Ltd
• Series: Energy Policy
• Subjects: Abatement; Applied sciences; Atmospheric pollution; Australia; Baseline and credit; Climate; Combustion and energy production; Electricity; Emissions control; Emissions trading; Energy; Energy consumption; Energy economics; Energy efficiency; Energy policy; Environmental policy; Exact sciences and technology; General, economic and professional studies; Governance; Greenhouse effect; Greenhouse gases; New South Wales; New South Wales, Australia; Pollution; Pollution sources. Measurement results; Separation of powers; Studies; White certificates; Australia; New South Wales; Oceania; New South Wales Australia; Australia, New South Wales; Governance; Baseline and credit; White certificates; Emission permit; Environmental policy; Greenhouse gas; Pollution control; Pollution prevention; Energy policy; Pollutant emission; Implementation
• ISSN: 0301-4215; 1873-6777
• DOI: 10.1016/j.enpol.2008.04.010

The New South Wales (NSW) Greenhouse Gas Reduction Scheme (GGAS) in Australia is a baseline and credit emissions trading scheme with the stated aim of reducing the per-capita greenhouse emissions associated with electricity consumption in the state of NSW. Here we provide a detailed assessment of the GGAS design and operation, with a particular emphasis on its effectiveness in delivering physical emissions reductions that would not have occurred in its absence. We find that a number of design features mean a significant proportion of the tradeable ‘abatement’ certificates are unlikely to correspond to the claimed emissions reductions. While some of these adverse design choices might be corrected, others would seem inherent to the underlying scheme design. Our analysis highlights the major governance challenges with emissions trading approaches and hence the importance of good policy implementation processes including the need for separation of powers through a scheme development process that involves design, assessment and revision. These GGAS lessons would seem relevant for governance with all emissions trading schemes, and has particular implications for cap and trade schemes that incorporate baseline and credit offset schemes, as well as to the ‘White Certificate’ schemes increasingly being seen as a means of fostering enhanced end-use energy efficiency.