Efficacy of emissions trading schemes in Australia
thesisposted on 28.03.2022, 18:43 authored by Deborah Joan Cotton
The aim of the thesis is to bridge the gap between the research conducted in Europe and the USA and the situation in Australia in relation to the efficiency of market based climate change mitigation schemes. The thesis is motivated by the gap in research covering what action on mitigation is occurring in Australia and what the Australian public actually wants in relation to climate change mitigation. The analysis of responses to our survey of the Australian public revealed a wide range of responses to questions on the expected effects of climate change, appropriate policies and whether action should be taken. The dominant view was that the Australian Government should take action on climate change irrespective of international agreement. Two studies were undertaken to test the efficiency of already existing emissions trading markets in Australia with the second using a generalised forecast error variance decomposition analysis technique for the first time on this type of market. It then undertook generalised impulse response function analysis which indicated that when shocks are applied to the electricity prices by the two schemes it returns to equilibrium very quickly. Our research on the efficiency of the market-based schemes found them to be largely inefficient and this is in line with some of the existing International research. While some research has been undertaken internationally to determine why this may be the case, this thesis took current techniques for conducting research on financial markets and applied them to these schemes. The behavioural aspects of the market were analysed and we found evidence that market ambiguity is a factor in the inefficiency. This analysis of actual markets is among the first of its kind on ambiguity in markets. This thesis contributes to existing research in areas either not previously analysed in this depth and by using new research methods. It will benefit both future research and climate mitigation policy direction.