Australia's Carbon Pricing Mechanism

Currently under development, Clean Energy Legislative package introduced to the Parliament 13 Sept. 2011 (as of 9/2011)

http://www.cleanenergyfuture.gov.au/clean-energy-future/our-plan/

http://www.cleanenergyfuture.gov.au/clean-energy-future/carbon-price/


Overview
Market Size and Scope
Offset Project Eligibility
Additionality Requirements and Project Methodologies
Project Approval Process


Overview

Type of Standard and Context

The Australian Government released its Clean Energy Plan in July 2011, the Clean Energy Bill 2011 was introduced to the Parliament in Sept. 2011, the plan includes a Carbon Pricing Mechanism, initially a carbon tax on large polluters that will transition into a cap-and-trade scheme, and the Carbon Farming Initiative (CFI), a domestic carbon offset scheme. The CFI act was passed in the Australian Parliament in August 2011 and became lay in Sept. 2011. The Clean Energy Plan was released following the decision in April 2010 to delay implementation of the Carbon Pollution Reduction Scheme (CPRS) until after the end of the current Kyoto commitment period, if there is greater clarity on the action of other major economies including the US, China and India. The Carbon Pollution Reduction Scheme Bill 2009 legislation was first introduced to the Australian Parliament in early May 2009. The Senate voted against the CPRS legislation in August 2009 and again in December 2009, after it had been reintroduced in Oct. 2009. A timeline of decision's related to Australia's climate change activities can be found here.

The Carbon Pricing Mechanism, introduced as part of the Clean Energy Plan (full report can be found here), will commence on July 2012. For the first three years the carbon price will be fixed, then it will transition into an emissions trading scheme in 2015. During the first price period, regulated entities will be able to meet up to 5% of their compliance obligation using CFI credits. Once the emissions trading scheme begins, regulated entities will be able to buy international offsets from international carbon markets or emissions trading schemes of other countries to meet a portion of their compliance obligation.

Standard Authority and Administrative Bodies

The Climate Change Authority will be established by the Australian Government to track GHG emissions and serve as advisory body for the operation of the Carbon Pricing Mechanism. The Domestic Offsets Integrity Committee, an independent expert committee, has been established to assess offset methodologies and advise the Minister of Climate Change and Energy Efficiency.

Regional Scope

The proposed plan is to develop a domestic carbon pricing scheme for regulated entities. Projects developed through the CFI will be located in Australia.

Recognition of Other Standards/ Linkage with Other Trading Systems

It is proposed that once the emissions trading scheme phase begins on July 1, 2015, that the domestic carbon price will be linked to international carbon markets. CFI credits will be able to be sold to the international market. Until 2020, regulated entities will be required to meet at least have of their compliance obligation through domestic allowances or CFIs. NSW legislation states that the NSW GGAS will cease to operate upon the commencement of a Australian national emissions trading scheme. Since the announced delay of the implementation of the CPRS, the NSW Government has advised that the NSW GGAS will continue until 2020 and beyond.

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Market Size and Scope

Tradable Unit and Pricing Information

Under development

Participants/Buyers

Under the proposed scheme, participants will include regulated facilities (facilities with GHG emissions greater than 25,000 metric tons of CO2e/yr) and transport fuels for domestic aviation, marine and rail transport. A carbon price may be expanded to heavy on-road transport in 2014.

Current Project Portfolio

Not applicable.

Offset Project Eligibility

Project Types

As of Sept. 2011, the Domestic Offsets Integrity Committee is considering five proposed methodologies: savanna burning, landfill gas, feral animal management, swine manure management and reforestation. Proposed methodologies can be found here.

Project Locations

Under development.

Project Size

Under development.

Start Date 

Under development.

Crediting Period

Under development.

Co-benefit Objectives and Requirements

Under development.

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Additionality Requirements and Project Methodologies

Additionality Requirements

Under development.

Project Methodologies

Offset projects established under the CFI will need to apply methodologies approved by the Australian Government. Methodologies can be developed and proposed by private project proponents and government agencies. Proposed methodologies will be posted online for public comment.

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Project Approval Process

Validation and Registration

Under development.

Monitoring, Verification and Certification

Under development.

Registries and Fees

Under development.

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