Australia, California in talks to link carbon trading

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Australia, California in talks to link carbon trading

Australian and Californian government officials have pledged to work towards linking their nascent carbon markets, they said on Sunday.

Speaking on a state visit to the US, Australia's climate change secretary, Mark Dreyfus, said the two governments would set up a forum to share experiences on climate policy, including how best to build carbon markets.

"California has long been at the forefront of US efforts to reduce carbon pollution. What happens here is watched closely by others states and nations," said Dreyfus in a prepared statement.

In August, Australia and the EU said they would link their respective carbon markets from 2015.

Extending ties to California could lead to a single carbon market covering more than 5 billion tonnes of carbon dioxide equivalent annually, more than 10 per cent of global greenhouse gas emissions.

California will next year launch a carbon market in a bid to return its emissions to 1990 levels by the end of the decade.

By 2015 the initiative will cover 85 per cent of the state's emissions and become the third biggest carbon market in the world after the EU's $US148-billion scheme and one currently being developed in South Korea.

"California's cap and trade program has some similar design features to Australia's, covering around 350 businesses," said Dreyfus in the statement released ahead of a formal meeting of major economies in New York.

"It also includes the ability to establish domestic programs to generate carbon offsets. Across a range of different areas, we can learn from each other's experiences and share methodologies."

China, the world's biggest emitter, also plans to launch a nationwide carbon market before the end of the decade.

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'Share experience'

California's air resources board isn't actively considering a link to Australia's program that would allow companies in the two jurisdictions to trade carbon allowances and offsets across borders, said Dave Clegern, a spokesman for the board in Sacramento.

“We're more focused on learning from each other at this point as we inaugurate our programs,” Clegern said. “The ongoing relationship with Australia provides us both with the opportunity to share experience and information as our programs develop.”

California is also in talks with the Mexican state of Chiapas about partnering in efforts to reduce greenhouse gas emissions, said Mary Nichols, chairman of the air board, last month. The discussions probably won't result in a “full linkage” with the state's emissions markets, she said at the time.

The air board expects to submit a proposal to California Governor Jerry Brown this year to form joint emissions markets with the Canadian province of Quebec. The province, which releases about one-sixth the greenhouse gases that California does, would become the first jurisdiction to link systems with the state.

Reuters with Bloomberg

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