28 Aug 2012: Australia and EC linking Emissions Trading Systems

The Australian Minister for Climate Change and Energy Efficiency, the Hon Greg Combet MP, and the European Commissioner for Climate Action, Ms Connie Hedegaard announced today that Australia and Europe will be linking their emissions trading systems.

A full two-way link, by means of the mutual recognition of carbon units between the two cap and trade systems, is to commence no later than 1 July 2018. Under this arrangement, businesses will be allowed to use carbon units from the Australian emissions trading scheme or the European Union Emissions Trading System (EU ETS) for compliance under either system.

“Linking the Australian and European Union systems reaffirms that carbon markets are the prime vehicle for tackling climate change and the most efficient means of achieving emissions reductions” Mr Combet said.

“The European Union is the first regional emissions trading system and spans the largest part of the European continent. We now look forward to the first full inter-continental linking of emission trading systems” Ms Hedegaard said. “It is further evidence of strong international cooperation on climate change and will build further momentum towards establishing a robust international carbon market.”

To facilitate linking, the Australian Government will make two changes to the design of the Australian carbon price. These are that:

  • the price floor will not be implemented.
  • a new sub-limit will apply to the use of eligible Kyoto units.

In recognition of these changes and while formal negotiations proceed towards a full two-way link, an interim link will be established, whereby Australian businesses will be able to use EU allowances to help meet liabilities under the Australian emissions trading scheme from 1 July 2015 until a full link is established, i.e. no later than 1 July 2018.

“Starting today, Australian liable entities can purchase EU allowances for future compliance in Australia,” Mr Combet said. “These arrangements provide Australian businesses with access to a larger market for cost-effective emission reductions and provide European market participants with enhanced business opportunities.”

More information here and FAQs here.

Media contact European Commission: Isaac Valero-Ladron (+32 49 896 49 71, isaac.valero-ladron@ec.europa.eu)