A Post Keynesian Perspective on Industry Assistance and the Effectiveness of Australia's Carbon Pricing Scheme

Neil Perry

The Economic and Labour Relations Review, 2012, vol. 23, issue 1, 47-65

Abstract: Australia's carbon pricing scheme protects the profits of polluters and, as a consequence, has a negligible impact on the carbon emissions emanating from Australian industries. I concentrate on the assistance given to emissions-intensive, trade-exposed industries and use a post Keynesian approach to explain that, despite the rhetoric, industries and firms will not move offshore under a carbon price and industry assistance is unnecessary. When assistance is given, profits are protected and could increase in certain industries, which occurred in the comparable European emissions trading scheme. In orthodox economic theory, despite this negligible impact on profits, any method of pricing carbon causes a reduction in emissions because firms seek to adjust technology and factor inputs at the margin and abate until marginal abatement costs equal the carbon price. However, from a post Keynesian perspective, the government's prediction of a transformed economy and clean energy future will not occur unless the carbon pricing policy reduces the corporate profits of emitting firms. Thus, complementary policies are required to take the burden of reducing emissions off the more symbolic carbon market established. I further argue that a carbon tax without any industry assistance is a preferred approach and that where plant shutdown does occur, carbon emissions around the world will fall and workers could be compensated at a far smaller cost than the adjustment assistance given to industries in the policy's current form.

Keywords: Carbon price; industry assistance; Kalecki; mark-up pricing; post Keynesian economics; Salter; profits (search for similar items in EconPapers)
Date: 2012
References: Add references at CitEc
Citations:

Downloads: (external link)
https://journals.sagepub.com/doi/10.1177/103530461202300104 (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:sae:ecolab:v:23:y:2012:i:1:p:47-65

DOI: 10.1177/103530461202300104

Access Statistics for this article

More articles in The Economic and Labour Relations Review
Bibliographic data for series maintained by SAGE Publications ().