Direct Action — Australia’s new carbon policy

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In a previous alert, we canvassed the repeal of Labor’s Carbon Pricing Mechanism (CPM), which was a key plank of the coalition’s previous election campaign. This article examines the coalition government’s alternative carbon policy — Direct Action — and some of its likely impacts on Australian businesses.

At the broadest level, Direct Action is framed around the Emissions Reduction Fund (ERF). The ERF would be used by the government to purchase carbon abatement via a ‘reverse auction’ system. Hon Greg Hunt, in his recent role as shadow minister for climate action, environment and heritage, called the mechanism a ‘carbon buyback’ — similar to the existing buy-back structure in the water market.

The key elements of Direct Action include both a carrot and stick approach, as outlined below…

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