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Originally published in The Australian on March 28, 2013

Tony Abbott’s Direct Action Plan has been ridiculed by many as expensive and unworkable. One of the primary objections has been that the centrepiece of the policy, the Emissions Reduction Fund, is a baseline-and-credit scheme that will require counterfactual baselines to be set for every participating polluter. The baseline for a given polluter will be an estimate of what its emissions would have been in the absence of the incentive provided through the scheme. Payments to polluters will then be made for any emission reductions below the baseline. This type of scheme is not novel or untested.

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