Are carbon trading schemes effective?

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\"\"Nazifi, who previously worked as a lecturer of Economics at the University of Economics Affairs in Tehran, Iran, came to Australia about four years ago and decided to pursue research opportunities to improve her career prospects here.

Nazifi is working with Dr George Milunovich, Associate Professor Stefan Trueck from the Faculty of Business and Economics and Professor Ronald Ripple from Curtin Business School. “Our study is one of the first projects which analyses econometric evidence of the existing carbon trading schemes,” she says.

“Climate change is considered by many to be the most significant environmental and economic challenge facing humankind. In an attempt to slow down and stabilise the pace of climate change, most countries have ratified the Kyoto Protocol. So far, several international markets for carbon permits have emerged. A carbon trading mechanism allows most greenhouse gases (GHG) abatements to occur in those sectors of the economy in which it is cheapest – achieving the cap with the lowest possible economic impact.”

I wanted to choose a research area which was topical and would contribute to major contemporary policy debates

Her results to date have:

* Measured the impact of carbon allowance trading on energy prices
* Looked at the price impacts of linking the European Emission Trading Scheme (ETS) to the Clean Development Mechanism (CDR)
* Modelled the price spread between the European allowances and Certified Emission Reduction carbon prices

Nazifi presented her second journal article The price impacts of linking the EU ETS to the CDM at the 2009 International Association for Energy Economics Conference (IAEE). Her presentation won the paper award and has been tentatively accepted for publication in the journal Environmental Economics and Policy Studies. Nazifi’s third journal article on Modeling the price spread between the EUA and the CER has been accepted for presentation at this year’s IAEE conference and won the paper award.

“This is a highly topical and relevant area of research with potential benefits at both the national and international levels,” says Nazifi. “The main concern of the Australian Government is getting the design of the CPRS correct. Our findings can help policy makers to benefit from the experience of the existing trading schemes and to make better decisions or regulations in order to respond to climate change in the most cost effective way.”

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