Econometrics - Heather Anderson (Monash University)

Econometrics Seminar Series

Title: Estimating the effect of an EU-ETS type scheme in Australia using a synthetic treatment approach

Abstract: The 2011 Clean Energy Act sought to align Australia’s carbon pricing to the 2005 European Union Emission Trading Scheme (EU-ETS) by 2015, but this act was repealed in 2014. We estimate the hypothetical impact of Australia adopting an emissions trading policy in 2005, which corresponds with the establishment of the EU-ETS. We use a synthetic treatment approach that constructs a counterfactual measure of Australian carbon emissions that makes use of the time series properties of pre-2005 emissions in European countries.We find that in the 12 years after 2004, Australian per capita emis-
sions would have fallen by approximately 15.56% (rather than the observed 9.5%) - a result that is robust to several variations of our methodology.