November 9, 2011 / 2:09 AM / in 6 years

Australia seeks to link carbon market to Europe, NZ

MELBOURNE, Nov 9 (Reuters) - Australia is in talks to link its carbon market with those in the European Union and New Zealand, Prime Minister Julia Gillard said on Wednesday, fresh from pushing through landmark laws to impose a price on carbon emissions.

For more on the new laws

The 500 Australian manufacturers, miners, transport groups and energy producers who will face a fixed tax of A$23 ($23.78)per tonne of carbon emissions from mid-2012 will be able to start trading emissions credits from 2015.

Critics of the tax say it is unnecessarily costly, as at A$23 a tonne it is double current prices for carbon credits in Europe, and would prefer a freely traded price from day one.

Gillard brushed off the concern, suggesting the current price in Europe was probably not representative of what it may be three years from now.

“Everything in Europe is volatile at the moment. Every market is volatile. So I don’t think it should be any surprise to us that carbon markets are also volatile,” she said at a carbon conference in Melbourne.

She said she wanted Australian businesses eventually to be paying a global price for carbon emissions.

“We do want to see international linking of global carbon markets, so that’s a very important part of the scheme,” she said.

She said the government has started discussions with New Zealand and the European Union, both of which already have carbon emissions trading, to link up with Australia’s emissions trading scheme.

Australian companies will be allowed to offset up to half of their emissions with offshore credits from 2015 but have held back from buying cheap credits from offshore, due to uncertainty over the fate of the carbon tax law.

Now that the law has passed, companies involved in carbon emissions trading are optimistic that big polluters will want to build up credit banks for 2015 and beyond, before carbon credit prices go up.

“We have a very bullish view on the international price,” said Nick Armstrong, chief executive of COzero, a company that trades green credits.

“We think it’ll be up in the mid-A$20s by 2015.” ($1 = 0.967 Australian Dollars) (Reporting by Sonali Paul; Editing by Ed Davies)

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