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Flaws Identified in Government's Direct Action Carbon Plan

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An independent economic analysis of Australia’s Direct Action program to reduce greenhouse gas emissions has found major flaws in the program.

The analysis by Dr Paul Burke from The Australian National University (ANU) has found the Direct Action program often leads to inefficient spending on projects that would go ahead anyway without government support, and that the scheme likely overstates the amount of emissions reductions.

Direct Action works by allocating funds for emissions reduction projects through a series of reverse carbon auctions. Since it was introduced in 2014, around $1.7 billion has been allocated for projects promising to lower carbon emissions.

“Unfortunately, projects that would have gone ahead even without a subsidy - anyway projects - have a cost advantage that makes them well placed to win the auctions,” said Dr Burke, a climate economist at the ANU Crawford School of Public Policy.

“When projects of this type receive funding, taxpayers’ money is being used ineffectively.

“The research concludes that Direct Action is likely to be delivering emission reductions that are smaller than the government has claimed.”

He said examples of anyway projects include many landfill gas capture projects, which have received Direct Action payments even though they can already generate revenues from their gas. Other projects...

The full text of this article can be purchased from Informit.