The Australian Securities Exchange (ASX), Australia’s primary stock exchange which was formed when the Australian Stock Exchange and Sydney Futures Exchange merged in late 2006, has today announced a plan to start trading carbon futures in the third quarter of 2009. The futures contracts for renewable energy credits, natural gas, and coal would complement the ASX’s existing electricity futures market.It is expected that futures contracts for renewables will be offered by the end of the year, while contracts for gas in Victoria, electricity in New Zealand, and power station coal exports from Newcastle in New South Wales will commence in March or April 2009.

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The Government today released its much-discussed green paper on the design features of its newly branded “Carbon Pollution Reduction Scheme” for commencement in 2010.  This follows Professor Garnaut’s release of his draft report on the scheme earlier this month, and the Government’s commitment to unveil the key features of the scheme by the end of this year.  It proposes the introduction of a broad-based cap and trade scheme with the following features:

Broad coverage: petrol in, reforestation opt-in

Broad coverage to include stationary energy, transport, industrial processes, fugitive emissions, waste and forestry, with agriculture likely to be incorporated by 2015.  The points of liability primarily fall on large facilities and upstream fuel suppliers.  The proposed threshold for direct obligations is 25,000 t CO2-e or more a year, which will capture approximately 1,000 Australian companies.  The impact of the inclusion of the transport sector, a highly sensitive issue, has been softened by a transitional measure of fuel tax cuts on a cent for cent basis, to be reviewed three years after the scheme starts.  There was also a question mark around forestry: the Government has dealt with this by proposing that reforestation be included on a voluntary “opt-in” basis while deforestation is not.

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Following Australia’s recent ratification of the Kyoto Protocol, the Federal Government intends to unveil its emissions trading scheme (ETS) by the end of this year, for commencement in 2010.  The key publications released to guide the development of the scheme, include the 2006 National Emissions Trading Taskforce’s report, the 2007 Prime Minister’s Task Group proposals, and the newly released Garnaut Review.

Professor Garnaut, an Australian National University economist asked by the Rudd Government last year to research the likely economic effects of an ETS, released his draft report on July 4, with the final report scheduled for release on September 30.  Garnaut’s report outlines the following key issues:

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This week, I will be posting updates on the United Nations Conference on Climate Change discussions being held in Bali, Indonesia.

The 13^th Conference on Climate Change kicked off with enthusiasm, but little fanfare. The highlight of the day was Australia’s new Prime Minister, Kevin Rudd, formally announcing his country’s ratification of the Kyoto Protocol.  The announcement leaves the U.S. as the only developed country to not agree to adopt the Protocol.

In his opening remarks, UNFCCC Executive Secretary Yvo de Boer outlined the main issues for delegates to act on during the meetings. Mr. de Boer emphasized the need for practical action on the issues of adaptation and reducing emissions from deforestation and called for support for developing countries, including through a framework for an Adaptation Fund that could be worth “$300 million annually from 2008 to 2012,” according to Reuters.

Mr. de Boer encouraged delegates to work towards the goal of adopting “a formal negotiating agenda.” Four important keys to the success of the talks, he said, are: leadership from industrialized countries; technology access and incentives for developing countries; recognition of our collective responsibility to use fossil fuels without destroying our environment; and a “focus on creating opportunities rather than being paralyzed by threats” by prioritizing adaptation.

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