Policy Uncertainty about Australia's Carbon Price: Expert Survey Results and Implications for Investment

Frank Jotzo, Jordan Tim, Nathan Fabian

    Research output: Contribution to journalArticle

    Abstract

    Australia's carbon-pricing policy remains in doubt due to a lack of bipartisan political support. A survey of Australian-based carbon-pricing experts demonstrates profound policy uncertainty: 40 per cent of respondents expect the current carbon-pricing mechanism to be repealed, but 80 per cent expect that there will be a carbon price in 2020. The forward price curve is U-shaped and has great variance, with the 60 per cent confidence interval spanning from zero to A$25/t in 2020. Carbon policy uncertainty causes large excess costs in Australia's energy sector and may result in delay and diversion of investment.
    Original languageEnglish
    Pages (from-to)395-409
    JournalThe Australian Economic Review
    Volume45
    Issue number4
    DOIs
    Publication statusPublished - 2012

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