Economy

Aug 29, 2012

EU linkage shows where carbon pricing scheme really creaks

A link with the EU emissions trading scheme simply confirms a fiscal problem built into the government's package all along.

Bernard Keane — Politics editor

Bernard Keane

Politics editor

Is the government’s decision to link its carbon pricing scheme to the EU short-term gain for long-term pain? That’s the tenor of much of the commentary today in relation to the fiscal impact in 2015-16 of removing the floor price in the first year of a floating price. Henry Ergas conjured up a $25 billion black hole using the old trick of going out a few years. In this case, entirely arbitrarily, Ergas used five years. Forward estimates cover four years, Henry.

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