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Australia in talks to link carbon mechanism to EU ETS

05 Dec 2011 17:53:45


Australia took another step towards linking its carbon pricing mechanism (CPM) to the EU emission trading system (ETS) on Monday as it revealed planned 2012 talks to examine how the two systems can be integrated.

This follows news on 5 September that Australian prime minister Julia Gillard and European Commission president José Manuel Barroso had established talks to exchange experience on the design and implementation of Australia's CPM.

As part of the proposed discussions, Australia and the EU will examine the mechanics of linking Australia's CPM and the EU ETS; look at relevant developments in other organisations, such as the UN Framework Convention on Climate Change (UNFCCC), the International Maritime Organisation (IMO) and the International Civil Aviation Organisation (ICAO); and share views on international credit developments with third parties.

The Australian parliament passed its clean energy legislative package at the beginning of November. It introduces a tax on emissions from next year on and an emissions trading system at the start of 2015. The country's emission trading system will be the second-largest programme of its kind, after the EU ETS ( see EDCM 8 November 2011 ).

The Australian climate change and energy efficiency minister Greg Combet said in a statement that as the country's carbon price had been ratified the government, it was now keen to focus on linking its system to other emission trading systems and integrate it into international carbon markets.

From NZ to EU ETS?

Meanwhile, links between Australia and New Zealand's emissions trading systems look likely to be completed by 2015 - around the same time as the start of Australia's flexible pricing period for its carbon pricing mechanism and integration with the EU ETS.

The Australia New Zealand Carbon Pricing Officials Group (CPOG) aims to examine the different ways that the two Asia Pacific systems could link, identifying issues in the design of these systems that may make it difficult to link them up, and where they may need to be better aligned, as well as assessing the time frame for linking the two systems.

This will include the possible timing for any linking to come into force and practical steps needed in each country to enact it.

Officials said they will work through 2012 to consider costs and benefits of potential linking options and will create a "work programme" to support a potential start date of 1 July 2015, once Australia moves to a flexible price mechanism.

The Australia-EU exchange is led by the Australian Department of Climate Change and Energy Efficiency and the European Commission Directorate-General for Climate Action with officials reporting to their respective ministers and commissioners responsible for Climate Change; while the CPOG will advise its respective climate change ministers on specific options to link these systems directly.


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