Friday 25 February 2011
The Commonwealth Government has released high level detail around the carbon price mechanism which it hopes to implement by 1 July 2012.
The details released to date are high level only. They cover the start date, framework for fixed and flexible price mechanisms, transition to emissions trading, sectoral coverage and international linkages. The proposed architecture for the new scheme follows Professor Garnaut's original recommendations, as he continues to play an integral role in advising the Government and multi-party climate change committee.
Overview
An initial fixed carbon price mechanism with compliance responsibilities for liable entities could commence on 1 July 2012. This is subject to gaining the support of both houses of Parliament and passing into legislation – anticipated for late in 2011.
The initial fixed price phase could be between three and five years, with the price increasing annually at a pre-determined rate.
At the end of the fixed phase, an emissions reduction target for 2020 could be set, and the scheme would transition to the floating phase, with a flexible price cap-and-trade emissions trading scheme. However, this could be deferred depending upon the outcome of a review 12 months before the end of the fixed price phase. The review would involve consideration of matters including the level of international carbon prices, Australia's progress towards meeting its targets, and the impact of the price on the economy and reductions of carbon pollution.
Coverage
The carbon price mechanism would cover emissions from stationary energy, transport, industrial processes, non-legacy waste, and fugitive emissions (except decommissioned coal mines). It would not cover agricultural emissions or other emission sources covered under the proposed Carbon Farming Initiative.
International linking
Liable parties would only be able to use international emissions units for compliance with their Commonwealth scheme obligations during the floating price phase (not during the fixed price phase).
Matters not addressed
The information released to date is high level only and does not address:
- industry, community and household assistance
- support for low emissions technology and innovation.
Recommendation
Based on the information currently available, the key issues for businesses will be similar to those considered under the Carbon Pollution Reduction Scheme (CPRS) (namely assigning the risk for carbon costs and compliance). It is not too early to begin reviewing contracts and considering these issues in current negotiations. We will keep you informed once further information becomes available.>
Friday 25 February 2011
The Commonwealth Government has released high level detail around the carbon price mechanism which it hopes to implement by 1 July 2012.
The details released to date are high level only. They cover the start date, framework for fixed and flexible price mechanisms, transition to emissions trading, sectoral coverage and international linkages. The proposed architecture for the new scheme follows Professor Garnaut's original recommendations, as he continues to play an integral role in advising the Government and multi-party climate change committee.
Overview
An initial fixed carbon price mechanism with compliance responsibilities for liable entities could commence on 1 July 2012. This is subject to gaining the support of both houses of Parliament and passing into legislation – anticipated for late in 2011.
The initial fixed price phase could be between three and five years, with the price increasing annually at a pre-determined rate.
At the end of the fixed phase, an emissions reduction target for 2020 could be set, and the scheme would transition to the floating phase, with a flexible price cap-and-trade emissions trading scheme. However, this could be deferred depending upon the outcome of a review 12 months before the end of the fixed price phase. The review would involve consideration of matters including the level of international carbon prices, Australia's progress towards meeting its targets, and the impact of the price on the economy and reductions of carbon pollution.
Coverage
The carbon price mechanism would cover emissions from stationary energy, transport, industrial processes, non-legacy waste, and fugitive emissions (except decommissioned coal mines). It would not cover agricultural emissions or other emission sources covered under the proposed Carbon Farming Initiative.
International linking
Liable parties would only be able to use international emissions units for compliance with their Commonwealth scheme obligations during the floating price phase (not during the fixed price phase).
Matters not addressed
The information released to date is high level only and does not address:
- industry, community and household assistance
- support for low emissions technology and innovation.
Recommendation
Based on the information currently available, the key issues for businesses will be similar to those considered under the Carbon Pollution Reduction Scheme (CPRS) (namely assigning the risk for carbon costs and compliance). It is not too early to begin reviewing contracts and considering these issues in current negotiations. We will keep you informed once further information becomes available.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
