European Council authorises EU & Australia ETS link

On 13 May 2013, the European Council adopted a decision authorising the European Commission to open negotiations regarding the linking of the EU Emissions Trading Scheme (EU ETS) with an emissions trading scheme in Australia.

The step is a precursor to the linking up of the two ETSs by 1 July 2018 and follows the agreement reached between the Commission and Australia in August 2012 to establish a full two-way link between the EU ETS and the Australian ETS. Under the programme, businesses will be allowed to use carbon units from the EU or the Australian ETS for compliance under either system.

To facilitate linking, the Australian government will make two changes to the design of the Australian carbon price. Firstly, the price floor will not be implemented and secondly, a new sub-limit will apply to the use of eligible Kyoto units. While liable entities in Australia will still be able to meet up to 50 per cent of their liabilities through purchasing eligible international units, only 12.5 per cent of their liabilities will be able to be met by Kyoto units.

Source: Cembureau, European Council