About the Carbon Pollution Reduction Scheme
The Carbon Pollution Reduction Scheme has two distinct elements - the cap on carbon pollution and the ability to trade. The cap achieves the environmental outcome of reducing carbon pollution. The ability to trade ensures carbon pollution is reduced at the lowest possible cost.
Guiding principles
The following principles will guide the development of the scheme:
- The scheme will be a 'cap and trade' scheme. That is, it will set an overall environmental cap by issuing a set number of permits, and allow entities to trade permits, thereby putting a price on carbon.
- The caps will be designed to place Australia on a low emissions path in a way that best manages the economic impacts of transition, while assuring our ongoing economic prosperity.
- The scheme will have maximal coverage of greenhouse gases and sectors, to the extent that this is practical. The broader the scheme's coverage, the more cost-effectively it will reduce greenhouse gas emissions, and more fairly spread the burden of such reductions across the community.
- The scheme will be designed to enable international linkages, while ensuring it suits Australia's economic conditions.
- The scheme design will address the competitive challenges facing emission-intensive trade-exposed industries in Australia.
- The scheme will also address the impact on strongly-affected industries.
- Measures will be developed to assist households - particularly low income households - to adjust to the impact of carbon prices.
