Floating the Carbon Dollar Part 2: The Garnaut Emissions Trading Scheme Discussion Paper

Key Point

• The Discussion Paper recommends broader coverage of sectors in the Australian economy, with a consequential reduced role for offsets.

As foreshadowed in its Interim Report released in February 2008, the Garnaut Climate Change Review has released a discussion paper on the recommended design elements of an Australian Emissions Trading Scheme ("AETS"), which is the centrepiece of Australia's climate change policy.

The significance of the introduction of an AETS should not be underestimated - it signals profound and long term structural change for Australia. As with the establishment of any artificial market and the creation of new tradable rights, there will be winners and losers from the creation of a carbon market. There is also the potential for significant redistribution of wealth within the Australian economy and the wider community. This creates significant