Bringing emissions trading forward

Australia s emissions trading scheme is starting early 16000646 800508955 0 0 6000496 300

Those interested in Australia's future as a clean and renewable energy nation will be fascinated to hear that the federal government has made a significant announcement relating to the nation's carbon pricing mechanism, which has been in place since July 1, 2012.

Recently there has been a lot of discussion and debate over Australia's 'carbon tax', with opponents arguing it unfairly lumps costs onto household consumers through higher electricity prices.

Supporters, on the other hand, say the impact on households is minimal and the pricing mechanism already shows it has had an effect on the reduction of carbon emissions.

Currently at a fixed price, the carbon pricing mechanism was scheduled to move to an emissions trading scheme where the price was set by the market - but not until 2015.

The federal government announced on July 16 that the emissions trading scheme will be moved forward by one year and will commence on July 1, 2014.

This decision is not yet set in stone as it relies on the passage of relevant legislation. However, if passed it is expected to bring down the price per tonne of carbon dramatically.

The current 2013-14 cost is $24.15 per tonne and was slated to be $25.40 for 2014-15.If the change to emissions trading goes through, the price for 2014-15 is expected to be around 75 per cent lower than this.

Another part of the plan the government has announced includes considering advice from the Climate Change Authority (CCA) on a pollution cap, which will set out of the amount of covered emissions that will apply in 2014-15, consistent with Australia's emissions reduction target.

Liable entities will also be given access to  international carbon permits, including those from the European Union Emissions Trading Scheme (EU ETS), as well as unlimited access to units generated from the Carbon Farming Initiative.

Also known as a 'cap and trade' model, Australia's new emissions trading scheme is predicted to move the price of carbon emissions per tonne in line with the price relevant to the EU ETS.

The government plans to consult on draft legislation for this move, where various interested or concerned parties can outline their views on the details and implementation of the early emissions trading scheme.

Posted by Charlie Moore