Appendix 6
Terms of Reference of the
peer review undertaken by Dr Brian Fisher
A PEER REVIEW OF THE
TREASURY MODELLING OF THE ECONOMIC IMPACTS OF REDUCING EMISSIONS
That Dr Brian Fisher (former Executive Director of ABARE and
currently of Concept Economics) be engaged to provide a review of the Treasury
Modelling Australia’s Low Pollution Future: The Economics of Climate Change
Mitigation including all relevant publicly available information, and having
requested full access to the government’s model, documentation, codes and
databases, any further information made available by the government, with
particular reference to the following:
1. Sensitivity
analysis of the assumptions on which the modelling has been undertaken;
2. The
impact on global emissions of the government’s proposed emissions trading
scheme and the potential leakage of Australian jobs and industry in:
2.1 emission
intensive trade exposed industries such as aluminium, LNG, cement
and agriculture;
2.2 non
trade exposed industries such as electricity.
3.
The economic and environmental consequences of the Government’s proposed
eligibility thresholds for emissions intensive, trade exposed (EITE) industry
assistance;
4. The
consequences of more realistic assumptions concerning:
4.1
the likelihood of the rest of the world taking similar actions to
Australia;
4.2 the
participation of China in a global emissions trading scheme by 2015;
4.3 the
participation of India in a global emissions trading scheme by 2020;
4.4 the
immediate participation of the United States in a global emissions trading
scheme;
4.5 the
likelihood of a global agreement being sustained through the year 2050;
4.6 commercial
scale availability and use of carbon capture and storage technology,
particularly in the light of assumptions regarding the path of the carbon
permit price;
4.7 low
or non-existent barriers to international trade in carbon permits;
4.8 the taxation
treatment of permits, both in Australia and overseas.
5. The
failure to include the impact of the global financial crisis on:
5.1 Australia’s
capacity to bear the costs of participation in a global emissions trading
scheme;
5.2 the rate at which other
countries will commence participation in a global emissions trading scheme.
6. The impact of the Government’s
emissions trading scheme on issues of national security including fuel
resources and refining, construction resources and energy security;
7. The impact of the Government’s
emissions trading scheme on government revenue and spending, and the total
revenue that the Government can expect to collect from the scheme
through the year 2050;
8. The economic costs of the
Government’s expanded renewable energy target compared to the costs
of alternative policy approaches;
9. Testing
the veracity of the conclusions that under the Government’s emissions trading
scheme by 2050 electricity prices in Australia would rise five times as much
as in the US, Canada, Japan and the EU and three times as much as in China
over the same period;
10. The impact of the Government’s emissions trading scheme and a rising carbon price
in all years that the scheme is in place on:
10.1
unemployment;
10.2
cost of living pressures for households, pensioners and individuals more generally;
10.3
inflationary pressures;
10.4
nominal interest rates, and real interest rates;
10.5 Aggregate productivity.
11. The economic impact of
Australia introducing a poorly designed scheme in 2010, rather than a
better designed scheme in 2011 or 2012, taking into account the decisions
of major emitters;
12. The discounted present value
of the economic costs and benefits of the Government’s proposed emissions
trading scheme;
13. The adaptation opportunities
that could be foregone as a result of implementing a poorly designed
emissions trading scheme, and the economic costs of not implementing
those opportunities;
14. The economic impact of the
government’s emissions trading scheme on farming and agricultural
industries, even if those industries are not covered in any scheme before
2015;
15. The desirability of
fixed-price permits, versus a price cap on permits;
16. The impact of the
government’s proposed emissions trading scheme on the financial
viability (as opposed to economic viability) of coal-fired electricity generators,
both in the short run and long run;
17. The cost and accuracy of
compliance measurement, both in Australia and internationally;
18. The economic and
environmental implications of the White Paper (due December 2008).
Duration
That the review be completed by 30
January 2009.
Content
That the review consist of written
analysis together with supporting data in tabular and diagrammatic form.
Contract
That the consultant comply with the
terms of the attached contract.
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