Sustaining Climate Policy Reforms: A Tale of Two Reforms

Abstract

In July 2014, Australia abolished the Australian carbon pricing mechanism introduced in 2011. In comparison, the EU emissions trading scheme has been up and running since 2005 despite critical challenges at various junctures. What explains the quick unravelling of the former and the sustainability of the latter? The reasons may be three fold. First, the multiplicity of preferences among Australian veto players, coupled a partisan climate politics, has made climate policy inherently unstable. In the EU, on the other hand, a less divisive climate politics set the stage for an inter-temporally stable climate policy. These led to a divergence in interest groups’ feedback to the introduction of the respective climate policies. While Australian partisan climate politics incentivised businesses to fight back, a less partisan politics in the EU sent a unified message for businesses to adapt. Finally, Australia’s climate policy lacked effective adhesion and flexibility mechanisms to prosper in an uncertain political future.