May 24, 2013

Europe, Australia and the slow death of carbon trading

Europe’s carbon pricing woes cast further doubt on the credibility of Australia’s scheme and on Treasury’s revenue forecasts. Climate change law research Fergus Green writes at Inside Story.

With last week’s federal budget slashing the forecast revenue from Australia’s carbon pricing scheme for the second half of this decade, it’s a good time to have a closer look at the Gillard government’s decision to link the scheme with its embattled European counterpart from July 1, 2015.


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7 thoughts on “Europe, Australia and the slow death of carbon trading

  1. Mike Flanagan

    While it may be true that the EU Carbon market is both at odds with recent past projections contained in our budget, and is a dominant factor today in setting of our permit prices, I doubt, that will last for many more months or years.
    The adoption of a cap and trade system of permits by Chinese regions, California and a number of other smaller economies around the world, I suggest will quickly supplant the influence of the EU permit prices, if internationalised.
    I would also suggest the coming IPCC report will create an avalanche of scientific reports that will predominant suggest that the physics is telling them we need to radically accelerate our emissions reductions and our adaption policies and endeavours.
    That also should have implications to permit pricing in the market.
    Thanks Fergus! A good yarn!!

  2. Scott

    “The adoption of a cap and trade system of permits by Chinese regions, California and a number of other smaller economies around the world, I suggest will quickly supplant the influence of the EU permit prices, if internationalised”

    Somehow, I don’t think so. The EU’s permit auction volumes of 818,855,500 a year (in 2013) dwarfs the Californian scheme(57,000,000 in 2013) so any influence will be lost in translation (in world financial markets it’s the market that turns over the biggest volumes that sets the price…liquidity is key). The Europeans have also voted once already on “backloading” in April, and it didn’t get up. Another vote due in July I believe, with some ammendments but likely to fail again. I don’t see the price of carbon increasing massively any time soon.

    As for the Chinese schemes, let’s wait and see. The potential is huge (plenty of emissions to reduce), but none of them are running at the moment (the smallest city starts up in June) and details are sparse at best.

    Hoping for a sense of urgency from AR5 might also be a bit optimistic. Since AR4, most research has been pointing to a reduction in the climate sensitivity estimates rather than an increase. But again, we will wait and see what the IPCC can produce.

  3. Patriot

    Won’t bother reading your article, but you can forget about carbon pricing in this country for a generation or longer. After the Gillard government’s disastrous and deceitful handling, it is politically untouchable. No government or party in their right mind will chain themselves to the putrid corpse that remains after it’s repealed.

  4. AR

    Why has PatrIdiot returned to these comments? Typical to proclaim “won’t read the article” but here is my beaten boilerplate bullshit noentheless.

  5. Mike Flanagan

    Well said AR.
    Scott; Thanks for your comments but may I suggest that it is the number of permits available that appears to be corrupting the system. Supply and demand equations?
    The Cameron retreat from their green agenda, and their fright from the UKIP platform and recent electoral successes, is the driver of their obstruction of the European efforts to revive and renew their original C and T, together with Merkel trying to preserve her dwindling support.
    I venture to suggest much of that obstruction will dissapate over the comming months following the public presentation of the accumulating science that suggests our past and current efforts at mitigation are inadequate to meet agreed targets.
    If the history is anything to go by, we will have a considerable number of up to date science assessment and reports preceding the presentation of the IPCC report.

  6. Stephen

    Cap and trade is just the market’s latest and smartest ploy for business-as-usual. It doesn’t care much about reducing emissions, or the natural environment.

    Once you read the word ‘market’ in any so-called environmental measure, you can fairly safely assume that its main priority is not about human overpopulation and the effects of that on habitat, biodiversity and species.

  7. Thorn

    The Australian scheme is obviously a prisoner to the other schemes around the world – as is every other aspect of global policy in this country. This carbon trading concept is all new to every country involved and it is no surprise that it is not running like clockwork.

    But at least they are doing something. Abbott has exactly the same targets as Labor (reiterated by Hunt this morning) and has absolutely nothing to offer as a way to achieve them except clap trap like the magic soil and giving my tax money to the worst poluters in the country in the hope they will solve the problem for him.

    Of all the vague hints at policy that Abbott has alluded to, his mystical carbon reduction policy is the most idiotic.

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