Question

QUESTION 10 Currently the Australian Government is aiming to reduce Australia's carbon emissions to 5% below 2000 emissions levels by 2020 Reforms Emissions change compared to 2000 | 10% increase levels) by 2020 Total cost for industries to introduce0 reform measures (billions of dollars No change | 5% 10% reduction reduction 0.3 a. If the Government introduced a permit system, resulting in total industry permit costs being $700 million, and capital investment total costs of $500 million, what would be the expected 2020 pollutions levels compared to 2000 levels? Type LT for Less Than, E for Equal to, or GT Greater Than b. Consider the mining sector is responsible for 8% of Australia's overall industry carbon emissions. The Government decides to introduce the reform option D (10% reduction). How much would it cost the mining sector (including both permit and capital investment) as a result of introducing this reform? Assume the cost is directly proportionally to all industries within the Australian economy. Answer to two decimal places in billions of dollars. $ billion c. The Australian Government decides to meet their 2020 emissions goal by issuing permits to polluters. The permits will cost industries $900 million to buy the required number of permits. Industries need to spend an additional $300 million on improving (reforming) their operations and equipment to reduce their carborn emissions under the permit system. What is the net cost to society as a result of the Government's approach? Answer to the nearest whole number in millions of dollars (with no decimal places). $ million

Answer 1

a) If government introducing a permit system, then the expected 2020 pollution levels when we compared it with 2000 level will be approximately 5% reduction in total emission or we can say that LT 2000 emissions are W (b) Given that, 8% of the total carbon emissions is created by mining sector. Now, govermment decided to implement option D reform where emission reduction is 10% and total cost incurred by firms for introducing it is $1.5 billion 10% Reduction= 1.5 100 1% = 1.5 x 10 1%=S15 billion So. S% of carbor emissions 8x15 S120 BilionThis is the cost of introducing this reform for the mining industry

The net cost to society from the government approaches is $36 million 0.3 1 1.53% total industry cost 900 300 =$1200 million Net cost to society 3% of industries total cost 3 -x 1200 100 = $36million