Foundations for global emissions trading set as Australia linking with Europe
- 28 August 2012
MELBOURNE: Today Australia and Europe agreed on a pathway towards linking carbon markets, setting the foundations for global emissions trading.
The Australian Government has scrapped its plans to set up a minimum price for carbon permits and has instead chosen to fully link trading systems with the European Union by mid-2015.
Australia's Federal Climate Change and Energy Efficiency Minister, Hon. Greg Combet MP and the European Commissioner for Climate Action, Connie Hedegaard, announced the carbon price plans today.
Key developments announced include:
- Removal of the planned floor price of AUS$15 per ton at the end of the three-year fixed price period of $23 per ton.
- Reduction in the amount of Certified Emission Reductions (CERs) that Australian companies can use to meet their liability under the Australian scheme (from 50% to 12.5%).
- From the end of the fixed price period (2015), Australian companies will be able to use European ETS allowances to meet up to 50% of their liabilities under the Australian scheme, minus any CERs used. (This one-way link to the EU ETS scheme is intended to be followed by the reciprocal arrangement outlined in the next point).
- The Australian Government and the European Commission are negotiating on establishing a two-way formal linkage between the EU ETS and the Australian scheme, as of July 1, 2018. This would mean Australian carbon permits could be purchased by companies overseas to meet their liabilities under the EU ETS.
Commenting on the agreement, Greg Combet MP said: ““Linking the Australian and European Union systems reaffirms that carbon markets are the prime vehicle for tackling climate change and the most efficient means of achieving emissions reductions.” He also told reporters in Canberra: "This delivers certainty to businesses that will have a liability under the Australian scheme, because they will have access to the largest carbon market in the world. This is the best sort of confidence, market confidence, that you can deliver.”
EU Commissioner Connie Hedegaard stated: "We now look forward to the first full international linking of emission trading systems. This would be a significant achievement for both Europe and Australia. It is further evidence of strong international cooperation on climate change and will build further momentum towards establishing a robust international carbon market."
Caroline Bayliss, Australia Director, The Climate Group, commented on today’s Government announcement: “I welcome the discussions to formally link Australia to the influential EU ETS. Linking to a larger and more established system gives clarity and a safer signal to investors, so more businesses will be willing to support the scheme. The increased international trading opportunities also means Australia will remain competitive in the global low carbon economy.
“I look forward to similar schemes linking across the world to pursue the truly global emission trading platform that Australia and Europe have now laid the foundations for.”