The Australian Carbon Pricing Mechanism: Promise and Pitfalls on the Pathway to a Clean Energy Future

Abstract

A major issue facing efforts to transition from high carbon to low carbon (“clean energy”) sources in the United States is the lack of well-developed legal and policy “infrastructure” to facilitate this transition. This Article considers the lessons for developing such infrastructure from Australia’s recent experience in introducing and implementing a national carbon pricing mechanism. This mechanism was intended to be the keystone of broader national policy arrangements to secure a “clean energy future” for the nation. Although there are significant differences between the legal arrangements governing energy generation and distribution in the United States and Australia (for example, the latter has a national electricity market supported by cooperative federal-state laws), there are yet many similarities between the two countries that enhance the potential for cross-jurisdictional learning. In particular, both countries are leading per capita emitters of greenhouse gases (GHGs), with significant emissions sourced from their respective energy sectors, which remain heavily dependent on fossil fuels (coal, natural gas, and petroleum) for energy supply. In addition, both countries have legal systems based upon common law foundations, embedded within a federal matrix of national and state laws relevant to issues of energy production, environmental protection, and climate change.