The Minister for Climate Change: Greg Combet and the European Commissioner for Climate Action, Ms Connie Hedegaard, announced on Tue 28.8.2012, that Australia and Europe would be linking their emissions trading systems.
A full 2-way link, by means of the mutual recognition of carbon units between the 2 cap and trade systems, is to commence no later than 1 July 2018. Under this arrangement, businesses will be allowed to use carbon units from the Australian emissions trading scheme or the European Union Emissions Trading System (EU ETS) for compliance under either system.
To facilitate linking, the Australian Government will make 2 changes to the design of the Australian carbon price. These are that:
- the price floor (planned to have been $15) will not be implemented;
- a new sub-limit will apply to the use of eligible Kyoto units. While liable entities in Australia will still be able to meet up to 50% of their liabilities through purchasing eligible international units, only 12.5% of their liabilities will be able to be met by Kyoto units.
In recognition of these changes and while formal negotiations proceed towards a full 2-way link, Mr Combet said an interim link will be established, whereby Australian businesses will be able to use EU allowances to help meet liabilities under the Australian emissions trading scheme from 1 July 2015 until a full link is established, ie no later than 1 July 2018.
The Minister said the European Commission and Australia will work to agree registry arrangements for the interim link by mid 2013. The Australian Government has agreed to enter into negotiations on a full-linking agreement, and the European Commission will seek a mandate to do so in coming months.
Source: Minister for Climate Change media release, 28 August 2012
[LTN 166, 28/8]