Australian Carbon Pollution Reduction Scheme
www.greenhouse.gov.au/emissionstrading
Overview
Additionality and Quantification Procedures
Overview
Type of Standard and Context
The Australian Government plans to establish a Carbon Pollution Reduction Scheme outlined in the December 2008 release of the Australia’s Low Pollution Future White Paper (Australian Government, 2008a). The Carbon Pollution Reduction Scheme Bill 2009 legislation was introduced to the Australian Parliament in early May 2009 (Point Carbon, 2009. This scheme would establish the long-term target of a 60% reduction in GHG emissions from 2000 levels by 2050 and a medium-term target to reduce emissions by a minimum of 5 and maximum of 15%, in the context of a global commitment to reduce emissions, below 2000 levels by 2020. The Australian Government intends to have the Carbon Pollution Reduction Scheme commence on July 1, 2010, as a cap and trade scheme with coverage of the stationary energy, transport, fugitive, industrial processes, waste and forestry sectors. Ongoing negotiations in the Australain Parliament may include delaying the start date to 2011, in order to gather increased support for the legislation in the Australian Parliament (Point Carbon, 2009). The Australian Government plans to consider the scope for domestic offsets in 2013, while concurrently considering the inclusion of the agricultural sector in the scheme. Until then, regulated entities are eligible to use CER and ERU credits generated from CDM and JI projects as an unlimited compliance mechanism (Australian Government, 2008a). Both the Report of the Task Group on Emissions Trading and the Garnaut Climate Change Review: Interim Report have explicitly recommended the use of domestic and international offsets as a cost-efficient compliance mechanism under the proposed emission trading scheme (Australian Government, 2007; Garnaut, 2008).
Standard Authority and Administrative Bodies
The Carbon Pollution Reduction Scheme will need to be established by legislation and associated regulations. A single independent regulator will administer the Carbon Pollution Reduction Scheme, along with the National Greenhouse and Energy Reporting System and the Renewable Energy Trust. Functions of the regulator will include enforcing compliance, maintaining the registry of domestic and international units, auctioning permits, and administering permit allocation rules (Australian Government, 2008). An independent expert advisory committee will be convened to conduct strategic reviews of the scheme, the first review is expected in 2014 (Australian Government, 2008a).
Regional Scope
The scheme outlined in Dec. 2008 is focused on developing a domestic emission trading scheme limited to Australia. However, in February 2008, Australia and New Zealand announced that they were examining ways to develop a linked scheme (Point Carbon, 2008). (New Zealand introduced its domestic cap and trade scheme on January 1, 2008. Forestry was the only sector covered in the first year (Point Carbon, 2008a).)
Recognition of Other Standards/ Linkage with Other Trading Systems
The scheme has been designed to be able to link with international carbon markets. Entities are permitted to use credits generated from the CDM (CERs) and JI (ERUs). No exports of allowance credits under the Australian Scheme will be permitted, unless a bilateral agreement with one other country were established following a 5 year notice period (Australian Government, 2008a). NSW legislation states that the NSW GGAS will cease to operate upon the commencement of a Australian national emissions trading scheme (NSW DWE, 2008).
Market Size and Scope
Tradable Unit and Pricing Information
Offset credits will be measured in units of metric tons of CO2e. Pricing information is not applicable.
Participants/Buyers
Under the proposed cap and trade scheme, regulated facilities will include direct emissions from large facilities and upstream fuel suppliers (Australian Government, 2007). Offset credits from CDM and JI have been recommended as an unlimited compliance mechanism for the facilities regulated under the cap and trade system (Australian Government, 2008).
Current Project Portfolio
Not applicable.
Offset Project Eligibility
Project Types
Offset credits generated from land use, forestry, wood production, avoided deforestation and carbon geosequestration projects have been identified as priorities under the proposed national emissions trading scheme (Australian Government, 2007). Unlimited offset credits for carbon sequestration projects from forestry and potentially soil management practices has been recommended in the The Garnaut Climate Change Review Final Report (Garnaut, 2008a).
Project Locations
International offsets generated through CDM and JI projects are proposed as eligible for compliance under the scheme (Australian Government, 2008a). The use of domestic offsets is proposed for 2013 and has yet to be defined (Australian Government, 2008).
Project Size
Under development.
Start Date
Under development.
Crediting Period
Under development.
Co-benefit Objectives and Requirements
Under development.
Additionality and Quantification Procedures
Additionality Requirements
Under development.
Quantification Protocols
Under development.
Project Approval Process
Validation and Registration
Under development.
Monitoring, Verification and Certification
Under development.
Registries and Fees
Under development.
Selected Issues
Because Australia’s Program is still in the process of being developed, there are few lessons to be learned to date.
With the commencement of an Australian national emissions trading scheme, the currently operating NSW GGAS would cease to operate. Several issues for consideration raised in The Garnaut Climate Change Review Final Report address the transition from the regional to the national emissions trading scheme, may also be relevant for other nations where regional programs have been established prior to a federal system.
The issues raised include (Garnaut, 2008a):
- Treatment of accredited abatement providers, project income could be reduced if projects eligible under GGAS are not eligible or to a lesser degree under the national scheme.
- Forestry carbon sequestration projects may be inconsistent with the intention to include the forestry sector under the cap of a national scheme.
- Mechanisms are needed to prevent hoarding of GGAS certificates in expectation of a higher price under the national emission trading scheme.
References
Australian Government (2007). Report of the Task Group on Emissions Trading. Department of the Prime Minister and Cabinet.
Australian Government (2008). Australian Emissions Trading Scheme
Australian Government (2008a). Carbon Pollution Reduction Scheme Australia’s Low Pollution Future. White Papter. Volume 1. December 2008.
Garnaut, R. (2008.) Garnaut Climate Change Review: Interim Report to the Commonwealth State and Territory Governments of Australia. February 2008.
Garnaut, R. (2008a). The Garnaut Climate Change Review: Final Report. Port Melbourne: Cambridge University Press.
NSW DWE (New South Wales Department of Water and Energy) 2008, Transitional Arrangements for the NSW Greenhouse Gas Reduction Scheme, consultation paper, NSW Government.
Point Carbon (2009). Carbon Market North America. Vol. 4 (fee required). 15 May 2009.
Point Carbon (2008a). Australia, NZ eye emissions trading link (fee required). February 27, 2008.