Carbon Trading
Overview
Under the impetus of Australia's ratification of the Kyoto Protocol in 2007, the implementation of an emissions trading scheme (Carbon Trading) has gained momentum. While Australia's commitments under the Protocol are relatively modest when compared with some other developed nations, the adoption of an Emission Trading scheme to meet Australia's Kyoto Protocol targets has not been without controversy. Following the Garnaut Review and the Federal Government's Green Paper and White Paper process, a package of draft legislation was unveiled in March 2009.
- The draft legislation encapsulates the actions that would seek to reduce greenhouse emissions between 5% and 15% below 2000 levels by 2020.
- The Carbon Pollution Reduction Scheme (CPRS) comprises a cap and trade model where 'liable entities' such as stationary power generators, and other energy intensive industries are set 'caps' on greenhouse gas(GHG) emissions and are allocated permits (Australian Emissions Units) by the Climate Change Regulatory Authority.
- These entities are required to surrender one AEU's equivalent to one tonne of their CO2 equivalent emissions. Where liable entities exceed their set amounts such entities may 'trade' i.e. purchase AEU or other 'credits' created under the Kyoto Protocol process to meet designated GHG limits.
- The CPRS sets a price cap of A$40 per tonne of CO2 equivalent from commencement of the scheme for the first five years with rises of 5% predicted.
The Rudd government has delayed introduction of the Carbon Pollution Reduction Scheme until 2011. In addition to the regulated carbon market that will emerge under the CPRS process there is a growing voluntary carbon market related to carbon offsets or carbon neutral schemes.
For more information please contact Prof Lee Godden
