In March 2005, the State and Territory Premiers and Chief Ministers announced that a multi-jurisdictional greenhouse gas emissions trading scheme will be developed. A key issue is whether or not the scheme will be able to link in with other international carbon markets. The Inter-Jurisdictional Working Group (IJWR) on Emissions Trading has now released a background paper on such a scheme for stakeholder consultation.
The Group has agreed to rely on the following ten key principles to investigate the feasibility of a domestic trading scheme:
- that the scheme be designed around a cap and trade approach, and that it be a national scheme using a sector based approach to caps
- that consideration be given to the national emissions abatement target (108% of 1990 levels between 2008-2012) when setting the cap and allocating responsibility between sectors
- that the scheme initially apply to the stationary energy sector (including electricity, gas and coal) and that it cover all six greenhouse gases mentioned in the Protocol and allow offsets
- that permits be allocated both administratively and by way of auction
- that a penalty for non-compliance should be set at such a level as to encourage compliance and set a price ceiling for the permit market
- that adverse effects and structural adjustments be addressed
- that early abatement action by participants be recognised and that new entrants be accommodated.
The Group will assess the potential impacts of the proposed scheme on costs of compliance; specific industries; regional impacts and associated labour market issues; consumer energy prices and small business; and macroeconomic impacts.
The discussion paper seeks the views of stakeholders on: how emissions trading might best be implemented in Australia; issues of importance to stakeholders in the design of an emissions trading scheme; collecting research which has been carried out by researchers on emissions trading schemes; discussing strategies for improving certainty for investors; and seeking views from stakeholders whose associates have had experience with the EU Emissions Trading Scheme.
Source: IJWG, 12 September 2005.
