Carbon Price Mechanism Essay Example | Topics and Well Written Essays - 1500 words - 1

Carbon Price Mechanism - Essay Example The main goal of this essay is to comprehend the importance of this plan to the household economies and forecast the impacts of its implementation on these economies from the consumer behaviour perspective. It is crucial to overview main features of the proposed program before going into the discussion on its impacts. This program involves four major areas including the energy consumption, carbon price mechanism, increasing the efficiency of the energy consumption units and the management of the energy resources. The focus of this essay will be the mechanism for carbon price that has direct effects on the household economies and patterns of consumption of energy. This mechanism accompanies a list of various measures to explain its expected consequences on the business and households and methods for reducing the harmful effects by providing assistance in the form of increased cash payments and the reduction of taxes. Beyza reported that changes in the prices and income impacted the consumer behaviour, the proposed plan suggest two phase strategy for the implementation of carbon price mechanism. The first will continue for three years and during these years the carbon prices will remain fixed for at different levels for each year. For the first year the prices will be set at $ 23, for the second year the price will remain at $ 24.5 and during third year it will be increased further and will be fixed at $ 25.4. It shows that the prices will continuously increase during the first three years. The second phase is referred as the flexibility phase in which the prices remains flexible and will be determined with the help of emission trading scheme. The government will issue permits for the certain amount of carbon emission to various industries and the fees obtained from these permits will be used for the assistance of the household, small scale industries and for the promotion of alternate sources of energy which involve less carbon emission. Deborah (2010) described that the carbon price mechanism and assistance program by the government will have a combined impact on the household economies. The impact of both these factors on the economy of the household is explained below. Q. 1: What is the effect of rising energy prices for the economic wellbeing of households? Household is responsible for loads of carbon emission by consuming conventional sources of energy in large amounts. The economic reform program introduced by Austrian government aims to control the emission of carbon, change the energy consumption patterns of the