Carbon price featured in two positive posts today. Both would give some certainty to farmers under carbon offsets schemes. The first was reported by AAP, 28 August 2012, on what CO2Land org has tipped and that is that the European Emission Trading scheme was in a state of change and ultimately, all markets will benefit from these changes: The Australian Government announced plans to link Australia’s scheme to Europe’s emissions trading scheme from 2015. Also announced was an equally important event, The Department of Climate Change and Energy Efficiency, Carbon Farming Initiative team, announced the opening of Expressions of Interest for grants funding to develop carbon farming methods.
Why are the two linked? Aspects of both effect Australian companies that will be able to sell credits in Europe and farmers wanting some certainty to the ability to generate credits through changes to their land practices, and that had an issue in that it was well posted Australia might not have generated sufficient credits to meet the domestic demand.
The link is also important for project developers that are used to assigning risk to issuance of carbon credits and they can now be more certain that the projects will conform to pricing expectation without the need to vary or discount. Without it the only other option was to assign a risk to earlier transactions and take a greater discount.
What else is good? Currently Europe permits are trading for about 8 euro (high $9) and traders can offer that to you now to meet future liabilities. Sorry Tony, this means the carbon price will most likely be cheaper for Australian businesses by the effective date and possibly before, and the beauty of it is the European Union will be the one that will put the brakes on if things get too aggressive. Yes, someone else to watch over the price.
What else would farmers like? Current restrictions of the liability that can be met by overseas carbon schemes will be more price friendly through the European Scheme and that scheme will become a floating-price emissions trading scheme and the Australian linkage to Europe will be a free market with price advantages that can be traded without affecting the level of carbon cuts needed.
We will leave the clean energy advantages for another post.