Canberra Times
Wednesday 21/5/2008 Page: 6
Australia's emissions trading market has been unofficially born and the all-important carbon price has started at $19 a tonne. Energy giant AGL has sold Westpac bank 10,000 tonnes of "permits to pollute." AGL said the sale to Westpac would take effect in 2012, and would create liquidity in energy markets beyond 2010.
The official Emissions Trading Scheme, which puts a cap and a price on greenhouse gas emissions to help ward off climate change, is scheduled to start in 2010. The Federal Government will not finalise the scheme - which is likely to see emissions permits auctioned - until the end of the year at the earliest.
The chairman of information and business networking firm Asia-Pacific Emissions Trading Forum, Tony Beck, said the first permit sales showed the market was already taking shape. "It really marks the beginning of trading directly linked to an Australian Emissions Trading Scheme," the emissions trading expert said.
"It's demonstrating confidence that the scheme will be established." He said most companies would wait to buy emissions permits, but some would pre-empt the scheme to minimise risk and establish prices. "There will be a growing trade in anticipation of the scheme being established," Dr Beck said.
Buying or selling permits in advance was a case of "learning by doing." The $19 a tonne paid by Westpac was a reasonable estimate of what the carbon price would be, Dr Beck said, although it was lower than the European price of about 20 euro a tonne. Meanwhile, draft federal laws allowing the burial of greenhouse gases deep beneath the seabed are being scrutinised by oil and coal companies.
The controversial process, called Carbon Capture and Storage, is held by some to be a central part of Australia's efforts to tackle climate change. The Commonwealth laws would only allow such storage at sea. Burying emissions underground on land would be covered by state laws.
CO2 Cooperative Research Centre chief executive Peter Cook said a key issue with undersea storage was that oil and petroleum companies wanted sites for exploration and extraction, while coal companies wanted sites to fill with greenhouse gases. The draft laws tried to strike a balance between the two competing interests, Dr Cook said.
The Australian Coal Association welcomed the draft laws and said it would examine the legislation to ensure transparent, competitive arrangements were in place for access to storage sites. But Greens climate change spokeswoman Christine Milne said the laws opened a "Pandora's box" around who would be liable for leakage of greenhouse gases from undersea storage sites. She said it was an issue that could never be satisfactorily resolved.
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