Brussels, 28/08/2012 (Agence Europe) - Australia's emissions trading system and the European Union's emissions trading system (ETS) will be fully linked on 1 January 2018 at the latest, with an interim arrangement which will enable, from 1 July 2015, the two systems to be partially linked, European Commissioner for Climate Action Connie Hedegaard and the Australian Minister for Climate Change, Energy Efficiency, Industry and Innovation, Greg Combet, said on Tuesday 28 August.
This advance, which is the fruit of an agreement found between the two parties, crowns with success the efforts jointly undertaken since last March to make the two systems compatible and marks a new step towards the establishment of a global carbon market (see EUROPE 10590).
“Linking the Australian and European Union systems reaffirms that carbon markets are the prime vehicle for tackling climate change and the most efficient means of achieving emissions reductions. Starting today, Australian liable entities can purchase EU allowances for future compliance in Australia. These arrangements provide Australian businesses with access to a larger market for cost-effective emission reductions and provide European market participants with enhanced business opportunities”, Combet said in a joint press release. He believes that this agreement will reduce compliance costs of operations both in Australia and Europe.
Hedegaard recalled that “the European Union is the first regional emissions trading system and spans the largest part of the European continent”. She went on: “We now look forward to the first full intercontinental linking of emission trading systems. This would be a significant achievement for both Europe and Australia … and will build further momentum towards establishing a robust international carbon market.”
Under the terms of the agreement found between the two parties, the Commission will have to seek a mandate from the Council to negotiate, in the name of the EU, a new treaty by mid-2015 for the full linking of the two emissions trading systems. In order to reach this agreement of mutual recognition of the Australian emissions trading system and the EU's ETS and to facilitate the link between them, the Australian government will proceed to two modifications relating to the setting of the Australian carbon price. On the one hand it will not proceed to the implementation of its price floor for a tonne of carbon, and on the other hand a limit will be set on the use of Kyoto Protocol eligible international units, each valuing 1 tonne of carbon. The units concerned are the certified emissions reductions (CER) brought in under the clean development mechanism (CDM), the emission reduction units (ERU) from the joint implementation mechanism, and the removal units (RMUs) from land-use, land-use change and forestry (Lulucf) activities undertaken in the developed countries from Annex 1 of the Kyoto Protocol.
The partial link between the two systems, which will be established from 1 July 2015, will enable Australian businesses to buy and use EU emissions quotas, and European installations to use Australian units while waiting for the compliance of these quotas which will be effective as soon as the two systems are fully linked. (AN/transl.fl)