In an article in Wednesday’s Australian, Paul Kerin argues that our governments should focus on “first-best” environmental and energy policies to best serve the overall public interest. He warns that the negative consequences of second-best policy choices (such as the large-scale renewable energy target (LRET) and the maximum price cap (MPC) on wholesale electricity) are tempting governments to depart from “first-best” on others. Instead of making even more second-best policy choices (such as government procurement of generation capacity), our governments should focus on scrambling back up the slide towards first-best by replacing LRET with an emissions trading scheme and abolishing the MPC. The full version of Paul’s Australian article, is available here.
Electricity and the perils of second-best thinking – Paul Kerin
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