ETS, compensation and the trade exposed

I am quoted in the AFR saying various things today about emissions trading:

Melbourne Business School’s professor of management, Joshua Gans, said the imposition of a carbon price was an anticipated cost for business so there were no genuine grounds for compensation, except for low-income households and possibly measures to assist traade exposed operations, as recommended by Ross Garnaut.

“Their investments that have taken place previously have all taken place with that knowledge,” Professor Gans said.

… Professor Gans said dealing with trade-exposed sectors was very complex and an effective environmental policy woudl tax imports of carbon-intensive items such as steel.

However, he said Professor Garnaut’s message about assisting trade-exposed industries lacked clarity.

And let me repeat what I said last week on this: saving a ton of emissions by getting a trade-exposed industry to cut back on production is not a saving at all if that ton is produced elsewhere. We cannot be said to be dealing with our international obligations unless we deal with trade-exposed industries. At the moment, for import competition, I favour something akin to a carbon tariff. Yes, that is an ugly word but so be it.

4 thoughts on “ETS, compensation and the trade exposed”

  1. So are you a member of the Pigou Club? If so, Greg Mankiw should be pleased to have you.


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