Reducing a nation's carbon emissions seems such a large problem, it's hard to imagine how individual action can make a difference. The good news, however, is that we can do something while being paid by a simple fee levied on carbon polluting products such as fossil fuels.
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The current approach to carbon pollution in Australia is a patchwork of band-aids on a flawed system.
The problem revolves around externalities which occur when fossil fuels are allowed to pollute for free. The costs are borne by the environment and the general population. There is little or no financial incentive to reduce emissions.
A much simpler solution is to build the cost of emissions into pricing, thus eliminating many of the piecemeal government policies and regulations that are linked to particular technologies.
This can be achieved via the Australian Climate Dividend (ACD), which would allow business to do what it does best - innovate to find ways to reduce costs while cutting emissions.
Dividends would be payed to Australian households to spend on the low-carbon products that would naturally become cheaper than polluting ones. It would provide an incentive to rebalance the economy.
The ACD would be entirely cost neutral to the government. All earnings minus administrative costs would be shared equally with adult permanent residents, with an extra half share to each child in the household.
UNSW research shows that, at $50 per tonne, average income households would be nearly $600 better off, while households in the bottom 20 per cent would be more than $1200 per year better off.
Some prices would go up, but dividend payments would be greater than price increases for lower-income households because they spend less on carbon-intensive products.
A similar scheme operates in Canada called the 'Federal Backstop', where the bulk of fees collected are returned to households. They have found that 80 per cent of households come out ahead.
While Australia is a laggard in its approach to climate change, other nations are forging ahead. In particular, our major trading partners are now making changes that will disadvantage Australian exports.
It is likely that Europe will impose tariffs on countries such as Australia that do not apply a cost on carbon.
In effect, they will be imposing a carbon fee that could be collected and shared by Australians.
Most Australians would find it preferable to receive that money rather than it being paid to a foreign country as tariffs.
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