Carbon Pricing: The Real Dirt on Tax Vs. Permits

The purpose of putting a price on carbon is to force polluters to change their dirty ways, but the federal government's plan to delay an emissions trading scheme (ETS) in favour of a carbon tax ultimately may be more detrimental for the environment. Price volatility under an ETS is inducing fear among heavy emitters. However, uncertainty over carbon pricing is also the key driver for power plant owners to invest in cleaner technology, new research from the Australian School of Business reveals. And, while policymakers' intention of dampening volatility with an upfront tax seems more assuring, there may be a catch – it looks likely to be more punitive for big polluters.