Melbourne/London, 24 October - A new report by the Carbon Market Institute and the International Emissions Trading Association has encouraged the Australian Government to use its 2017 climate policy review to align climate policy implementation with the development of international carbon markets.
The recently released Optimising Australia’s Position in International Carbon Markets report, recommends that the Australian Government’s policy review should consider the opportunities presented by use of international emissions units, by linking to other markets and open up the prospect of export of Australian Carbon Credit Units (ACCUs).
“The Paris Agreement has set the stage for action on climate change into the second half of the century, and there now exists for Australia an opportunity to optimise its position in international carbon markets as they rapidly evolve”, says Dirk Forrister, President & CEO of the International Emissions Trading Association.
“Of the 189 nations signatory to the Paris Agreement more than 90 have highlighted that their level of commitment is conditional upon having access to international carbon markets”, notes Forrister
“Australia has already expressed its support for the use of market mechanisms to combat climate change. At the COP22 meeting in Paris in December 2015, Australia supported the Ministerial Declaration on Carbon Markets that was endorsed by 17 other countries”, says Peter Castellas, CEO of the Carbon Market Institute.
The report examines the provisions of the Paris Agreement, key policies enacted by other major emitters and the implications of these measures for Australian trade, including the impact of trade competitiveness and the prospects for the development of an export market for Australian carbon credits.
‘There are many international and domestic factors influencing the development and design of global carbon markets, and these will have increasing impacts on the Australian economy in coming years”, says Castellas.
“The 2017 policy review is an opportunity for the Australian Government to consider how the fungibility of ACCUs into other jurisdictions could realise a strong source of foreign demand for domestic abatement”, says Castellas.
The report highlights how the use of carbon credit instruments from other jurisdictions might support meeting Australia’s domestic targets under a tightening of domestic policies.
“The use of international units in Australia, under the safeguard mechanism, could bring a number of benefits in meeting compliance obligations,” says Castellas.
“As the world shifts towards low-carbon development, Australia’s energy-intensive, export oriented economy will become increasing exposed to markets where there is an explicit carbon price; a changing fossil fuel energy mix; and competition from countries whose policies may not be in alignment”, says Forrester.
“The Paris Agreement surprised many with the strength of its commitment to market mechanisms as a tool to combat climate change. In this next phase, the global community will need to work together to maximise the potential for markets, and ensure that this process is carried out in a timely manner to guarantee as much predictability as possibility”, says Forrester.
“The task remains for individual Parties to decide how to build and link markets, and how to ensure they achieve the greatest ambition at lowest cost. Australia can play a pivotal role in this discussion and in the carbon market economy that will evolve”, says Castellas.