Sydney, 27 November (Argus) — Australia's upper house of parliament the Senate yesterday passed legislation linking the country's proposed emissions trading scheme (ETS) with its EU equivalent from July 2015.
The relationship is expected to result in Australian liable emitters becoming potential buyers of EU carbon credits, as Australia will rely on importing carbon credits to meet its 2020 emissions reduction targets. The provisions in the new law will provide a one-way link with the EU ETS from 2015, with Australian entities able to acquire up to 50pc of their annual carbon liability through eligible carbons units such as EU carbon permits. A two-way link will be established from 2018.
“Linking emissions trading schemes broadens cost-effective abatement options and ensures emissions are reduced at least cost. This benefits Australia's businesses and economy,” said Australian climate change minister Greg Combet.
The reason for the staggered approach is that Australia has a fixed carbon price scheme until 30 June 2015 and from then plan to switch to a market-based mechanism such as an ETS. With Australia expected to be a net buyer of carbon permits, it does not want to put any upwards pressure on demand for local carbon units and wants an orderly transition to market that allows international participants.
The passage of the legislation also removes the A$15/t ($15.70/t) of CO2 equivalent floor price to the domestic carbon scheme. Australia introduced a carbon tax of A$23/t of CO2 on 1 July. “We are now 150 days into carbon pricing and unemployment is low, inflation is low, growth is solid, investment is strong and the emissions-intensity of our economy is declining,” said Combet.
Australia will hold a federal election by October 2013 and the conservative opposition, comprising a coalition of Liberal and National parties, is vowing to repeal legislation that is the basis for the carbon tax, a move that will break any link with the EU ETS.
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