Against the backdrop of widespread reform in Australia’s electricity sector, this paper proposed an emissions trading scheme for NSW – in 1995. It investigates three broad approaches: a regulatory system, a carbon tax and a tradeable permit scheme, concluding that the latter was best placed to meet targets for emissions reductions at the lowest economic cost. It argues that the establishment of the national energy market in the 1990s provided NSW with the opportunity to simultaneously introduce a scheme to reduce greenhouse emissions by allocating emissions permits to newly-formed electricity distributors, creating a competitive market for the right to pollute and promoting clean energy development, including through a Sustainable Energy Fund. Given the ongoing public policy debate on emissions reductions, this paper was well ahead of its time.