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Recent modelling of the alternative approaches to climate policy proposed by the current federal coalition government and the labour opposition using BAEconomics’ CGE model suggest, as expected, that the use of market-based instruments such as an emissions trading scheme substantially reduces the cost of achieving a given emissions target. This result is not new. However, today it appears that there is an even lower probability that market-based instruments will be applied by governments to solve the climate problem. Instead, it appears that governments will favour regulation and special sectoral arrangements, thus imposing higher costs on society than are necessary to solve the problem.