Policy Forum: Designing a Carbon Price Policy: Reducing Greenhouse Gas Emissions at the Lowest Cost

Arguments for using a tax or an emission‐trading scheme on a comprehensive base of greenhouse gas emissions as a lower‐cost way of reducing pollution than regulations or subsidies are explained. While the Australian Government's ‘Clean Energy Future’ scheme, with its proposal for a price on carbon, moves in the low‐cost direction, the base is less than comprehensive and the scheme persists with, and in important ways increases the roles of, cost‐ineffective regulations and subsidies.