In contrast, conventional approaches to regulating the environment characteristically force entities to implement the same pollution control strategies, irrespective of the relative costs to the entities. This can be expensive and equally counterproductive since, although, the approach succeeds in limiting emissions, the attainment of the results is in an unjustifiably pricey way (Oates, Paul and Albert 1989, p.1233).
Non-market-based approaches offer minimal or no incentive whatsoever to do better than what the law demands, or no room to develop and experiment with new technology and equipment that might yield enhanced improvement in pollution control (Hahn and Stavins 1991, p.2). The net result in this case is a drag on productivity and criticisms regarding regulatory inefficiency, all of which undermine commitment to attainment of environmental gains. This observation shapes the call for regulation based on free-market and pro-regulatory approach as it delivers more gains to the society as a whole. Economists criticize non-market-based approaches approach to regulation by citing its costliness and rigidity (Driesen 2003, p.137). From late 1980s, market based instruments for environmental regulation gained prominence such as emissions trading programs. Australia Government’s response has been no different as espoused by its creation of pricing mechanism for carbon and fresh regulatory reporting requirements centring on greenhouse gas emissions, energy consumption, and production. The Australian government announced plans to replace the $15 per tonne carbon price floor with the introduction of the new carbon price in July 2012, in which the biggest polluters pay $23 per tonne for the carbon emitted (CO2-e). Australia plans to link its carbon pricing system with the European Union Emissions Trading Systems (EU) from July 2015. The National Greenhouse and Energy Reporting Scheme (NGERS) that commenced on July 2008 seeks to herald a solitary national reporting framework for constitutional corporations that bear significant greenhouse gas emissions right from energy consumption to energy production. Non Market-based Approaches: Traditional Command-and-Control A prescriptive regulation infers a policy that stipulates how much pollution an entity can emit, and/or what forms of control equipment it must utilize to satisfy those requirements. Such a standard is defined in terms of a source-level emissions rate. The main idea behind command-and-control rests in the fact that regulated entities are awarded minimal discretion in their pollution control efforts. Command-and-control approach covers a broad range of regulations manifesting varying degrees of flexibility and cost savings (Stewart 1992, p.547). In such circumstances, aggregate emissions will hinge on the number of polluters plus the output of each polluter. The prescriptive standard does not allow for reallocation of abatement activities as each entity may be still expected to attain a certain emissions standard (Stewart 1992, p.548). Hence, whereas pollution may be minimized to the desired level, it is often attained at a higher cost under a prescriptive approach. Performance-based standards A technology standard infers one that stipulates certain actions with minimal or no flexibility to adopt other actions that might yield the same environmental outcome. The focus on process or technology instead of the environmental outcome is what predominantly characterizes a technology standard. Conversely, performance standards highlight pollution or environmental quality and hence enable regulated sources some scale of