The sheer volume of overwhelming evidence pointing to its existence has catapulted global warming and the associated climate change to a position as the defining political challenge of the 21st century.[2] Its cause stems from the rapid pace of development that has followed the industrial revolution, as our machines and our factories pump ton upon ton of carbon into the atmosphere, heating the world at an ever-increasing pace. We stand at the tipping point now as countries race to implement mechanisms that will curb this behaviour and reduce greenhouse gas emissions to sustainable levels.


This report will analyse the various legislative and non-legislative mechanisms; such as the National Carbon Offset Standard and the placing of a price on carbon, that have been put in place in Australia to curb greenhouse gas emissions. The merits of these mechanisms will be evaluated in an effort to decipher their effectiveness in combating climate change.

1. Global warming - Linked to Emissions:

Research by the Berkeley Earth Surface Temperature project found that over the past 250 years the Earth's temperature has risen by about 1.5 degrees Celsius, including a rise of 1 degree in the last 50 years.[3] This rise can be attributed to humans as the results taken from land temperature stations correlate extremely closely to rising levels of carbon dioxide in the atmosphere, carbon dioxide that has been emitted through development.[4] The team of scientists on the project analysed measurements from 14.4 million measurements from 44,455 sites across the world, with results dating back to 1753.

The report went on to state that without large scale action the Earth's temperature is expected to continue to rise, with a rise of a further 1 degree in the next 50 years expected, however alarmingly if China continues to develop at its current pace, and continue with its vast use of coal, this rise could occur in the next 20 years.[6] Each decade in Australia since 1940 has been hotter than the preceding, with 2001 to 2010 the hottest on record.

Long term modelling indicates Australia will see a significant temperature increase by the end of this century.[8] The average temperature for Southeast Australia in the period 1961-1990 was 16.68 degrees Celsius, but the modelling indicates that this will increase to 20.27 between 2070-2099.[9] Looking just at the agricultural sector, this temperature rise will lead to a dramatic decrease in crop yields and a scarcity of water supplies.

1.2. Background:

The rapid pace of development that continues to accelerate has led to environmental externalities being overlooked in the decision making process.[11] Externalities are best described as the unrecognised costs of a transaction.[12] No price has been attached to them, which has led to a "divergence between private and social costs.” Arthur Cecil Pigou, a leading English economist of the 20th century stated that, "where such divergences arise, the State, if it chooses should remove the divergences through bounties and taxes.[14] He proposed that these taxes be used not to raise revenue, but rather to price externalities and change behaviour.[15] His theory was picked up in the Henry Review, which raised the idea of implementing such taxes as a way of shaping environmental behaviour, in particular by pricing emissions.

The pricing of carbon seeks to remedy the environmental externality that is the emission of greenhouse gases.[17] In Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263 taxation was defined by Latham CJ as, "compulsory exactions of money by a government for public purposes."[18] The pricing of carbon therefore falls under the definition of a tax, as it is a "compulsory extraction of money" by the government, with the proceeds being used to compensate individuals and businesses that will be negatively impacted by the change in policy.

A recent report by the United Nations estimated that negative environmental externalities cost $2.2 trillion in 2008.

[1] Joe Lieberman, ‘Preserving Our Planet: Remarks by Senator Joe Lieberman’ (24 June 2004) United States Senator for Connecticut <>.

[2] Kirk Simmons, ‘Why Nothing in this World is Certain Except Death and (Environmental) Taxes’ (2011) 28 EPLJ 368, 368.

[3] Elizabeth Muller, 250 Years of Global Warming: Berkeley Earth Releases New Analysis (29 July 2012) Berkeley Earth Science Surface Temperature [2] <>.

[4] Ibid 4.

[5] Leo Hickman, ‘What Evidence Will it Take to Convince Climate Sceptics?’ (30 July 2012) The Guardian [4] <>.

[6] Ibid 4.

[7] Explanatory Memorandum, Clean Energy Legislative Package 2012 (Cth), 4.

[8] William Cline, Global Warming and Agriculture: Impact Estimates by Country (Peterson Insitute, 1st ed, 2007 ) 38.

[9] Ibid 38.

[10] Ibid 29.

[11] Simmons, above n 2, 368.

[12] Gene Callahan, ‘What is an externality?’ (2001) 19(8) The Mises Institute Monthly 1, 4.

[13] Simmons, above n 2, 368.

[14] Ibid 368.

[15] Ibid 368.

[16] Ibid 368.

[17] Stephen Gardiner, Simon Caney and Dale Jamieson (eds), Climate Ethics: Essential Readings (Oxford University Press, 1st ed, 2007), 39.

[18] Matthews v Chicory Marketing Board (Vic) (1938) 60 CLR 263.

[19] Simmons, above n 2, 368.