Gap widens between Australian ETS price
If the carbon pricing mechanism survives the purges of the mono-syllabic Opposition Leader Tony Abbott it will exist for three years as a fixed price on carbon. The price for 12/13 is $23 per tonne of carbon dioxide equivalent (CO2e) emissions. The price will increase to $24.15 in 13/14 and $25.40 in 14/15. From 1 July 2015 the price will float and be tied to the European Union Emissions Trading Scheme (EU ETS) price.
The problem here lies in the poor pricing signals emerging from the EU ETS which currently sit at €5.68, a conversion of $7.11AUD per unit. This contradicts Climate Change Minister Greg Combet’s prediction in August that the 15/16 EU price will be $29 a tonne when he announced the scrapping of the $15 floor when the carbon price was pegged to the EU ETS.
When the AUS ETS and the EU ETS are linked in 2015, liable businesses can purchase half their carbon credits from international sources, which include cheaper EU credits. Also accepted are certified emission reductions (CERs) from Clean Development Mechanism projects under the Kyoto Protocol; and emission reduction units (ERUs) from Joint Implementation projects under the Kyoto Protocol.