The Carbon Market Institute has welcomed the acknowledgement from Palmer United Party leader Clive Palmer MP about the need for Australia to take action on climate change.
“We have multi-party support for a minimum five per cent target for emissions reduction by 2020 in Australia and with Mr Palmer’s announcement, we now have all key parliamentary parties indicating their political will to act decisively to address climate change,” says Carbon Market Institute chief executive officer Peter Castellas.
“When the new Senate meets to consider the repeal of the carbon tax and the introduction of the Emissions Reduction Fund, what’s really important is that Australia must avoid a policy vacuum,” he says. “We cannot afford a gap where there are no effective policies in place. Business needs the certainty of a stable policy framework.”
The Carbon Market Institute recognises a market-based approach is the least-cost method to achieve Australia’s emissions reduction target by 2020 and beyond. However the Institute says no single policy initiative will, in isolation, enable Australia to meet its internationally-agreed 2020 target in a cost-effective manner.
“Every major economy is adopting a suite of policies to limit emissions growth. In Australia, if we now have the political momentum to act, then we could potentially have a combination of the policies reflecting all major political parties’ positions. It doesn’t have to be a case of ‘either/or’,” says Castellas.
“Australia already has in place a successful domestic offset scheme, the Carbon Farming Initiative,” says Castellas. “The CFI is set to expand to include additional abatement activities through the ERF. Last night the amendments to the CFI to establish the ERF passed the lower house. If the carbon tax is repealed, the funding of abatement through the ERF will be vital to ensure continuity of CFI projects and incentives for investment in expanded abatement activities.”
“Another important measure is the Coalition’s plan to introduce a ‘safeguard mechanism’ which, if designed effectively, will establish baselines for business and could operate as a market mechanism to limit emissions growth and provide demand for domestic abatement. Industry consultation and detail on the design features of the safeguard mechanism needs to be fast-tracked,” says Castellas.
“Under the existing Carbon Pricing Mechanism, the regulatory architecture needed to support a move to an Emissions Trading Scheme is already in place. If, as Mr Palmer suggests, Australia should move to ‘establish’ an ETS and this is where the political negotiations land, there would be no reason to design a scheme from scratch.”
Recently there have been very significant developments in Australia’s key international trading partners in their approaches to carbon pricing. Momentum will continue with countries setting post-2020 national emissions reduction targets in the lead up to the Paris climate change agreement in 2015.
As carbon markets continue to develop and link across the world, the harmonisation of carbon prices across jurisdictions will likely occur. Any market-based mechanism implemented in Australia should enable Australian companies under the scheme to optimise their position by being able to trade in both domestic and international units.
“Australia can have both the expanded CFI and an associated effective safeguard mechanism or it can have the expanded CFI and move to an ETS that caps emissions,” Castellas says.
“Add to this the Renewable Energy Target which will help drive down electricity prices, the Clean Energy Finance Corporation to provide all-important finance solutions and the Climate Change Authority that can continue to provide independent expert advice on the operation of Australia’s carbon price, emissions reduction targets, caps and trajectories, and you have a suite of complementary measures contributing towards our emissions reduction target,” he says.
Moving sooner to a market-based system, either an ETS or an effective safeguard mechanism, in conjunction with the ERF and other supporting policies will enable Australian businesses to meet compliance costs more efficiently, harmonise with key trading partners, stimulate domestic investment and capitalise on opportunities in the inevitable transition to a low carbon economy.
“The Coalition, Labor, the Greens and now the Palmer United Party agree that it’s time to get serious about action on climate change – so what are we arguing about?” says Castellas.
The Carbon Market Institute is an independent membership-based not-for-profit organisation. Our aim is to assist Australian businesses in meeting the challenges and opportunities associated with market-based approaches to emissions reduction and the transition to a low carbon economy.
As the peak body for carbon market participants, CMI has established an important role in the evolution of the carbon market in Australia. The Institute facilitates the networks, knowledge exchange and commercial interaction amongst key government policy makers and regulators, industry, financiers and investors, professional services companies and technology solution providers.
CMI membership represents a broad range of professionals, organisations and industry. Our members include leading professional service providers, NGERs reporting entities, secondary market participants, offset providers, academia and international organisations. Individuals within the CMI membership base are some of the most respected Australian carbon market innovators and leaders.