Australia advised to triple its CO2 reduction target, rely on international offsets

27 February 2014 15:42 Source:ICIS

Australia should triple its current 5% CO2-reduction goal, to at least 15% below 2000 levels by 2020, the Climate Change Authority (CCA) recommended on Thursday. It acts as an independent advisor to the government on tackling emissions.

In addition, as Australia should add another 4% onto this target, bringing it to 19%, to offset a surplus of UN carbon credits, so-called Assigned Amount Units (AAUs), that the country has accrued as a result of emitting below its Kyoto target.

AAUs were issued to signatory countries of the Kyoto Protocol in line with the emission levels signed up for under the first (2008-2012) commitment period. Because industrial output fell during the global recession, and amid an over-allocation, countries such as Australia have accumulated an oversupply of AAUs.

The CCA also recommends a long-term CO2-reduction goal of 40-60% below 2000 levels by 2030, adding that the cheapest way to meet this target would be through a government-created fund buying international offset credits. This would cost between AU$210m (€137m) and AU$850m, assuming an average unit price of between AU$0.5-2.0/credit.

The Authority´s recommendations will probably fuel the debate about whether the government´s Direct Action Plan (DAP) will allow Australia to meet its emissions reduction targets, Yann Andreassen, Australian carbon market analyst at ICIS-owned Tschach Solutions, said this week.

The DAP was proposed by the Liberal-National coalition government, to substitute the Labor Party’s Carbon Pricing Mechanism.

The CCA’s strong emphasis on using international offsets contrasts with the DAP, which excludes the use of international carbon units, Andreassen added.

The government has six weeks to respond to the Authority’s proposal, according to law. However, the government has proposed to abolish the Authority in its carbon tax repeal bill, currently in the Senate. If the bill passes, the need to respond would be removed along with the CCA. Ling Ma

By Ling Ma