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The Climate Pollution Reduction Scheme uses a cap and trade (or emissions trading) scheme as the cornerstone to achieve emissions reductions in Australia. However, emissions trading is not perfect and there are a number of justifications for complementary measures to address some key shortcomings. These shortcomings provide a strong prima facie case for government interventions to complement emissions trading. Such interventions may include various research, development and deployment measures for low emissions technologies, energy efficiency measures, assistance to low income households, structural adjustment assistance and assistance to trade exposed emissions intensive industries. This report focuses on ‘emissions leakage’ as a rationale for government intervention and measures designed to address this problem. It does not assess the costs and benefits of providing EITE assistance for the purpose of transitional support.

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