Australian Carbon Demand in 2015-16

Updated on Monday, October 15, 2012 at 23:46 by MCJ

Updated on Thursday, October 25, 2012 at 16:29 by MCJ

In the September issue of Point Carbon’s Carbon Market Australia-New Zealand newsletter,  Cecile Langevin writes that

[Point Carbon] expect[s] the emitters covered in Australia’s emissions market will have 57 million fewer permits than they need in the year 2015-2016

and

the market price will be set by the international cost of U.N. Clean Development Mechanism (CDM) credits for the first two years, and then by EU Allowances (EUAs) the last three years of this decade.

Based on my rough calculations (below), the Australian market should demand 240-245 MtCO₂-e in 2015-16, and the government’s (official) projections are even higher, so I’m struggling to reconcile that with Point Carbon’s 57 million estimate.

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Surrendering to the Idea of a Price Floor

From July 2015, the Australian federal government will set the price of the permits in its emissions trading scheme free – within limits. The government intends to introduce a price floor and price ceiling until at least 2017/18.

This is good news for emission reduction activities whose viability depends on prices several years hence, such as larger, more complex projects. Further, the goal of abatement at least-cost should be balanced against the goal of abating as rapidly as possible; should reaching current targets be cheaper than expected, a floor price can ensure a minimum level of spending on abatement.

Last December, the government released a discussion paper and called for submission on the price floor, which combines a reserve price for Australian carbon units at auction with an ‘international unit surrender charge’ that ensures international carbon credits cost at least as much as domestic units. Four options are being considered for the international unit surrender charge.

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New South Wales Bins Carbon Trading Scheme

Updated on Thursday, April 5, 2012 at 13:50 by MCJ

Updated on Friday, April 13, 2012 at 18:58 by MCJ

I am quoted in today’s Point Carbon article on NSW’s announcement that GGAS is ending. (Readable with a free trial.)

Australian state New South Wales will abandon its Greenhouse Gas Abatement Scheme (GGAS) on July 1, when the federal government introduces a tax on CO2 emissions, state Energy Minister Chris Hartcher announced Thursday.

The baseline-and-credit scheme has operated since 2003, targeting emission cuts primarily in the state electricity sector, but also in industry and forestry.

 The phase-out was expected, but leaves market participants with 16 million surplus credits that will be ineligible for use in the nationwide scheme.

 This spurred Minister Hartcher to demand in local media Thursday that the federal government compensate the credit holders.

 However, market observers dismissed Hartcher’s claims.

 “It’s been clear from the outset of GGAS to all participants and government that GGAS would finish when a national carbon pricing scheme started,” said Martin Jones, a researcher at the University of New South Wales.

 “The problem of excess supply and an upcoming end date have been on the radar for at least half a decade, and insufficient efforts to address it have little to do with the federal government,” he told Point Carbon News.

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