Comparison of carbon trading tax and capping: Australian manufacturing sector prospective

Abstract

In recent times the Australian Manufacturing sector has undergone various economic changes to make it more financially unwavering. However, since the Australian Manufacturing sector is currently under severing competitive pressure from external factors (including cheaper production costs by international producers), any additional cost such as carbon taxing will be detrimental to its existence. As such Carbon Trading is a more appropriate option than Carbon Taxing. While Carbon Taxing is a fiscal system in which the polluters get charged for their produced pollution; Carbon Trading on the other hand is a form of Greenhouse Gases (GHGs) emission trading which specifically deals with trading the emission of Carbon Dioxide (CO2). This is a practice which it is designed to reduce the overall emission of CO2, along with other GHGs, by providing adequate regulatory and economic incentives. This procedure is party of a system, which is colloquially referred to as a "Cap-and-Trade". This Cap-and-Trade scheme is the most popular and perhaps feasible approach to regulate CO2 and other emissions. Under this scheme, the federal government of each respective nation sets a goal (quarter or yearly) for the total GHGs emissions over a set period of time. Credits are than allocated to companies which allows these organisations to emit certain amounts of GHGs. Organisations that do not have enough allowances to cover their emissions must either make reductions or purchase other organisations spare credits. Ultimately organisations with extra allowances can sell them or alternatively bank them for future use. Since Carbon Taxing was removed in 2014 by the newly elected Australian federal government, this paper will examine and discuss the Carbon capping scheme for the weakened Australian manufacturing sector with a transition to lower the overall Australian CO2production