A View to Our Emissions Trading Scheme: Whether It Is the Centrepiece of Australia's Efforts to Reduce Greenhouse Gas Emissions as the Government Claims, or Just One of a Raft of Measures as Others Argue It Should Be, Australia's Emissions Trading Scheme (ETS) Is Taking Shape. Robin Taylor Provides Perspective on What and Who Is Involved

By Taylor, Robin | Ecos, August-September 2008 | Go to article overview

A View to Our Emissions Trading Scheme: Whether It Is the Centrepiece of Australia's Efforts to Reduce Greenhouse Gas Emissions as the Government Claims, or Just One of a Raft of Measures as Others Argue It Should Be, Australia's Emissions Trading Scheme (ETS) Is Taking Shape. Robin Taylor Provides Perspective on What and Who Is Involved


Taylor, Robin, Ecos


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As Professor Ross Garnaut said when releasing his Draft Report in early July, Australia is not early in entering the global emissions trading market; other developed countries are already well into testing emissions market mechanisms. The European Union has had an emissions trading scheme since 2005, and Japan, Canada and New Zealand are all developing schemes. In the United States too, some state-based schemes already exist.

At home, the process isn't totally new-both NSW and the ACT have already made forays into emissions trading with schemes.

The Garnaut Draft Report calls for a broad-based emissions trading scheme (ETS) for Australia which includes the energy and transport sectors but excludes agriculture initially, due to the difficulty of measuring greenhouse gas emissions from that sector. Professor Garnaut says the interaction of the ETS with support for research, development and commercialisation will assist the transition to a near-zero emissions energy sector by mid-century.

The Australian mitigation efforts must be part of an effective global undertaking and Professor Garnaut has developed his proposed scheme on the basis of a short transitional period of Australian mitigation, directed at hopeful achievement of a sound global agreement.

Setting the right limits

Australia's average annual emissions entitlement limit under the Kyoto Protocol is currently 108 per cent of 1990 emissions over the period 2008 to 2012. Since we are already achieving this target (mainly due to the halt in land clearing in NSW), unless the cap on annual emissions is tightened, there will be little need for companies to buy permits. Under the Garnaut proposal, an emissions limit or 'cap' would be guaranteed or fixed for a period of five years and then updated every year by one year.

Adjunct Professor of Social Science and Planning at RMIT University and environmental consultant Alan Pears believes the Garnaut report is inconsistent by, on the one hand, acknowledging the seriousness of global climate change and the need for urgency, while on the other hand foreshadowing a slow tightening of the cap on emissions and hence a slow transition to a high carbon price.

'If we don't start to see significant carbon prices until 2013 it is a long delay, [particularly] when people are talking about large cuts by 2020, which in Australia's case means reversing a growth trend as well as then reducing carbon emissions,' he says.

'An ETS is an important element of climate change policy, but we need to be driving a lot of other elements as well. Unless other policies are starting to reduce our emissions and change our demand, politically it will be very difficult for the government to bring in a good quality emissions trading scheme.'

How the scheme works, and for whom

Features of the proposed scheme are government-auctioned permits which could be banked or borrowed--effectively allowing business to emit now and pay later, or vice-versa. The sum of all the permits issued equals the total amount of greenhouse gases that may be emitted to the atmosphere, effectively within the Kyoto target. Deciding the number of permits to be issued will be based on incoming and verified emissions data and the cap set on emissions.

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Sectors not covered can participate by creating offsets (e.g. tree plantations) that can be sold to liable parties within the scheme. This mechanism has been developed already to some extent by the voluntary sector and state-based monitoring schemes.

The aim of a well-designed ETS is to send price signals--or positive incentive--through the economy, effectively reflecting the scarcity value of target-limited emissions of greenhouse gases to the atmosphere.

Climate Change Minister, Penny Wong, has said that about 1000 companies will need to obtain permits under the government's proposed 'Carbon Pollution Reduction Scheme'. …

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A View to Our Emissions Trading Scheme: Whether It Is the Centrepiece of Australia's Efforts to Reduce Greenhouse Gas Emissions as the Government Claims, or Just One of a Raft of Measures as Others Argue It Should Be, Australia's Emissions Trading Scheme (ETS) Is Taking Shape. Robin Taylor Provides Perspective on What and Who Is Involved
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