Taking into account the social cost of energy
The Australian Climate Dividend Plan (ACDP) is a comprehensive marketbased approach to making energy in Australia more affordable, more reliable, and ensuring that the social cost of energy use is taken into account.
The ACDP involves a tax of CO2 emissions on electricity, direct combustion, transport, fugitive emissions, and industrial processes (‘the carbon tax’). The revenue generated would then be returned, evenly, to every voting-age Australian citizen.
Under the plan, border adjustments for traded goods would mean that Australian industry would not be put at a competitive disadvantage. Exports to countries without comparable schemes would receive rebates for the taxes paid. Imports from countries without such schemes would be charged fees based on the carbon content of those products. The plan would also permit the rollback of subsidies for renewables and similar measures—these being unnecessary given a carbon tax.
The ACDP would leave more than three-quarters of Australians better off financially, even if they did not change their current consumption or energy use. Lower-income households would receive a particularly large benefit relative to their existing incomes and expenditures.
From the same authors: Social Return Accounting