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 Emissions trading or the placing of a price on carbon to encourage the market to develop lower or zero emission energy sources has been on the agenda for the last several years in Australia. Energy intensive businesses, environment groups, sustainable energy groups and state and federal governments have a range of opinions about whether we should adopt emissions trading and if so, what model.
Background
Emissions trading (ET) establishes a market between high emitters (who exceed a cap) and those who can offer a reduction in emissions, through sale of permits. Funds are directed to the support of low or even zero emission technologies and practices. A cap is set on the total amount of emissions with a penalty on each business if it exceeds its share of the cap. The trade under the cap creates value for CO2 which to date has not been given any financial worth, amounting to free (and dangerous) pollution. The European Union has set up an ET scheme and the Kyoto Protocol also does this amongst those who have ratified. NSW has a form of mandatory emissions trading for electricity and voluntary entry for other large users of energy.
International, national and state information (NSW GOffice)
The Debate
The Australian debate revolves around the cost impact on high energy industry which may affect its competitiveness and how to obtain investment in low emission technologies that need to be ramped up to compete with fossil fuels. With the increasing acceptance that substantial action needs to be taken to reduce emissions environmentalists say there is no alternative to the comprehensive approach and impact of a well designed ET scheme. Some industry supports voluntary agreements while environmental and green energy groups want ET to be mandatory.
When an actual ET scheme is on the table there are many views about what should be in and out. What is the cap? Should some industry be exempted? Do you auction the permits to raise funds for structural adjustment and research? Do you include carbon sinks, which store CO2 or only allow technologies that eliminate emissions? How high is the penalty?
To date the Federal Government has resisted an ET scheme - Position and Background Papers. The states and terrotories have been in active dicsussion about one - National Emissions Trading Taskforce. The Business Council of Australia has published a series of Discussion Papers. The Australian Business Council for Sustainable Energy has made a strong submission to the states' taskforce - BCSE Submission. The Electricity Supply Association of Australia also made a submission - essa Submission.
TEC position
National and state environment groups have agreed to a set of principles to govern an ET scheme, including a progressive target to achieve a 60% cut in CO2 emissions by 2050 and auctioning of permits. Positions Paper on Emissions Trading
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