Asia-Pacific Emissions Trading Forum
Encyclopedia
The Asia-Pacific Emissions Trading Forum (AETF) is an information service and business network dealing with domestic and international developments in emissions trading
policy
in the Asia-Pacific
region. The AETF was originally called the Australasian Emissions Trading Forum, and was founded in 1998 under the auspices of the Sydney Futures Exchange. Since 2001 the AETF has published the AETF Review six times a year. This publication includes original articles on emissions trading developments and related topics.
Emissions trading is a key element of the Kyoto Protocol
and is largely compatible with the Copenhagen Accord
. National and regional schemes are operating in the European Union and are under active consideration in Australia, Japan, New Zealand and in the United States.
The Copenhagen Accord
, drafted by the United States, the United Kingdom and the BASIC (Brazil, South Africa, India and China) bloc, as well as several other countries, was the main outcome of COP15. It does not constitute a binding agreement, and has only been 'noted' under the United Nations Framework Convention on Climate Change
(UNFCCC). The document recognised that climate change is one of the greatest challenges of the present and that actions should be taken to keep any temperature increases to below 2°C. Further negotiations will continue throughout the year, culminating at the 2010 United Nations Climate Change Conference
in Cancún, Mexico from 29 November 2010 to 10 December 2010.
The Rudd Government
’s Carbon Pollution Reduction Scheme
(CPRS) White Paper represents the culmination of an unprecedented policy development effort in Australia, supported by the most detailed economic modelling undertaken by the Department of the Treasury (Australia)
.
The December 2008 White Paper was one milestone towards the Government's ultimate policy objective of implementing a cost effective and forward looking climate policy, which fully accounts for Australia’s particular environmental, economic and geopolitical situation. The exposure CPRS legislation, released in March 2009, converted the policy positions of the White Paper into legislative format.
The legislation and Parliament
The Minister Assisting the Minister for Climate Change, Greg Combet
, presented the legislation to Parliament on 14 May 2009. The legislation proposed for the scheme to be phased in from 1 July 2011, with carbon trading permits to cost a fixed $10 per tonne of carbon in 2011–12. Permit costs will transition to a fully floating market determined price from 1 July 2012.
The Senate rejected the legislation on August 13, 2009, despite an intense campaign from the Rudd Government
. Conservatives and industry associations said the proposed legislation would excessively damage the economy, while environmentalists denounced it as insufficient to curb emissions. In the end, 42 of the 76 Senators defeated the bill.
In November 2009, the then Opposition leader, Malcolm Turnbull
and the Prime Minister, Kevin Rudd
reached an agreement on the scheme after a number of significant changes were made. Deep divides within the Coalition ranks on the amended scheme and on the legislation in general resulted in Malcolm Turnbull
being displaced as Opposition leader prior to the Senate vote on December 2, 2009 however, resulting in Liberal opposition to the amended scheme and subsequent Senate rejection of the legislation for the second time. Despite two Liberal senators breaking ranks and joining Labor in support, the Government lost the vote with 33 in support and 41 against. Joining the Liberals in voting against the scheme were the Nationals, Greens, Family First and independent senators.
The carbon emissions legislation, as amended after negotiation with the Opposition, was introduced in the House of Representatives for the third time in the first week of February 2010. If the House approves the amended CPRS, the bills will again be presented to the Senate. If the Senate passes the bills, with or without acceptable amendments, then the CPRS legislation will become law.
If the Senate fails to pass, rejects outright, or makes unacceptable amendments, the bills will fail for a third time. The Government could then use the trigger and seek a double dissolution
.
In the wake of Parliament’s August rejection of a carbon emissions legislation, the Senate however did pass on a Renewable Energy Target Bill, after it was decoupled from the emissions bill. This new law requires that renewable sources supply 20 percent of the country’s electricity by 2020.
Coalition climate change policy
The Tony Abbott
led Coalition's direct-action climate policy proposals were released on 2 February 2010. The central pillar of its plan is an emissions reduction fund (ERF) which will be used to fund activities of businesses and farmers that reduce emissions and sequester carbon. Worth A$300 million in 2011/12 and increasing to A$1 billion by 2014/15, the Coalition claims that this measure will achieve a 5 per cent reduction in emissions by 2020 at a fraction of the cost of the government’s CPRS.
Questions have been raised on the effectiveness on these policies however. A report by carbon market analysts at Bloomberg New Energy Finance claims that the Coalition's climate change policy would cost taxpayers more than twice as much as the current Government's emissions trading scheme. The report concluded that the Government's scheme would cost the budget A$1.5 billion over the first four years - less than the A$3.4 billion of the emissions reduction fund proposed by Opposition Leader Tony Abbott
.
The report further argues that the Government's emissions trading scheme is considered more cost effective because it is a market-based system with penalties to force businesses to find the cheapest cuts. An emissions cap will also ensure that targets are achieved.
Australia’s emissions reduction target
The Australian Government in February 2010 submitted its plans for incorporation into the Copenhagen Accord
for cutting emissions by the year 2020. Australia will have a 5 per cent reduction target with no conditions applying and will only lift its target to 15 per cent or 25 per cent if countries like China, India and the United States agree to verifiable reductions. This is in line with previous Government announcements on Australian emissions reduction levels.
Australia is not the only country introducing emissions trading legislation. In the United States, the American Clean Energy and Security Act
, otherwise known as the Waxman-Markey Bill (after Democratic politicians Henry Waxman
and Ed Markey
), was formally introduced to the House Committee on Energy and Commerce in mid-May 2009.
The Bill was initially offered as a 648-page discussion draft to the House Committee on Energy and Commerce in March, after many hearings on the major issues. The discussion draft was a proposal to establish a national renewable energy standard and an economy-wide cap and trade program to address climate change. The proposal underwent several revisions (over 400 amendments) in the House Committee on Energy and Commerce and the Sub-committee of Energy and Environment before passing out on 21 May 2009, by 33 votes to 25. The bill was approved by the full United States House of Representatives
on 26 June 2009. As of February 2010, the United States Senate
was still debating on whether to pass the bill and establish such a scheme.
The Bill proposes to reduce American emissions by 3 per cent of 2005 levels by 2012, 17 per cent by 2020, 42 per cent by 2030, and 83 per cent by 2050. These reduction targets are consistent with stabilisation at 450ppm CO2-e, although the original proposed target of 20 per cent of 2005 levels by 2020 was negotiated down to 17 per cent. Furthermore, this 17 per cent target was officially stated as the goal in the United States submission for incorporation into the Copenhagen Accord
in January 2010.
, held in Copenhagen in December last year, aimed to establish a new post-2012 international agreement to supersede the Kyoto Protocol. Despite fundamental challenges remaining unresolved in terms of depth and distribution of emissions cuts, the meeting confirmed effective climate management as a political priority and some concrete outcomes were achieved in relation to financing, deforestation and adaptation.
One of the first processes linked to the Copenhagen Accord
is the submission of national emission targets by 2020 for incorporation into the Annex. The Accord engages all the largest emitters and introduces a new bottom-up architecture based on national pledges rather than top-down Kyoto-style targets and timetables. The structure will allow parties to nominate their commitments within an overall objective of limiting global temperature rise.
In addition to the submission of national pledges, the Accord also included provisions of scaled up, new and additional, predictable and adequate funding to developing countries from developed countries to support mitigation, including for REDD plus, adaptation, technology development and transfer, and capacity building. US$30 billion is expected for the period between 2010 and 2012, with this amount increasing to US$100 billion a year by 2020.
The focus is now on COP16, to be held in Mexico City in December 2010. The machinery of the UNFCCC will facilitate ongoing negotiations in the lead up to that meeting, and the mandate for the primary working groups has been extended to accommodate this.
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
policy
Policy
A policy is typically described as a principle or rule to guide decisions and achieve rational outcome. The term is not normally used to denote what is actually done, this is normally referred to as either procedure or protocol...
in the Asia-Pacific
Asia-Pacific
Asia-Pacific or Asia Pacific is the part of the world in or near the Western Pacific Ocean...
region. The AETF was originally called the Australasian Emissions Trading Forum, and was founded in 1998 under the auspices of the Sydney Futures Exchange. Since 2001 the AETF has published the AETF Review six times a year. This publication includes original articles on emissions trading developments and related topics.
Emissions trading is a key element of the Kyoto Protocol
Kyoto Protocol
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
and is largely compatible with the Copenhagen Accord
Copenhagen Accord
The Copenhagen Accord is a document that delegates at the 15th session of the Conference of Parties to the United Nations Framework Convention on Climate Change agreed to "take note of" at the final plenary on 18 December 2009....
. National and regional schemes are operating in the European Union and are under active consideration in Australia, Japan, New Zealand and in the United States.
The Copenhagen Accord
Copenhagen Accord
The Copenhagen Accord is a document that delegates at the 15th session of the Conference of Parties to the United Nations Framework Convention on Climate Change agreed to "take note of" at the final plenary on 18 December 2009....
, drafted by the United States, the United Kingdom and the BASIC (Brazil, South Africa, India and China) bloc, as well as several other countries, was the main outcome of COP15. It does not constitute a binding agreement, and has only been 'noted' under the United Nations Framework Convention on Climate Change
United Nations Framework Convention on Climate Change
The United Nations Framework Convention on Climate Change is an international environmental treaty produced at the United Nations Conference on Environment and Development , informally known as the Earth Summit, held in Rio de Janeiro from June 3 to 14, 1992...
(UNFCCC). The document recognised that climate change is one of the greatest challenges of the present and that actions should be taken to keep any temperature increases to below 2°C. Further negotiations will continue throughout the year, culminating at the 2010 United Nations Climate Change Conference
2010 United Nations Climate Change Conference
The 2010 United Nations Climate Change Conference was held in Cancún, Mexico, from 29 November to 10 December 2010. The conference is officially referred to as the 16th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change and the 6th session of the...
in Cancún, Mexico from 29 November 2010 to 10 December 2010.
Australia’s Carbon Pollution Reduction Scheme
The policy and legislative backgroundThe Rudd Government
Rudd Government
The Rudd Government refers to the federal Executive Government of Australia of the Australian Labor Party from 2007 to 2010, led by Kevin Rudd as Prime Minister. The Rudd Government commenced on 3 December 2007, when Rudd was sworn in along with his ministry...
’s Carbon Pollution Reduction Scheme
Carbon Pollution Reduction Scheme
The Carbon Pollution Reduction Scheme was a proposed cap-and-trade system of emissions trading for anthropogenic greenhouse gases, due to be introduced in Australia in 2010 by the Rudd government, as part of its climate change policy. It marked a major change in the energy policy of Australia...
(CPRS) White Paper represents the culmination of an unprecedented policy development effort in Australia, supported by the most detailed economic modelling undertaken by the Department of the Treasury (Australia)
Department of the Treasury (Australia)
The Department of the Treasury is an Australian Government department. Its role is to focus and develop economic policy.-History:The Commonwealth Treasury was established in Melbourne in January 1901....
.
The December 2008 White Paper was one milestone towards the Government's ultimate policy objective of implementing a cost effective and forward looking climate policy, which fully accounts for Australia’s particular environmental, economic and geopolitical situation. The exposure CPRS legislation, released in March 2009, converted the policy positions of the White Paper into legislative format.
The legislation and Parliament
The Minister Assisting the Minister for Climate Change, Greg Combet
Greg Combet
Gregory Ivan Combet AM MP is an Australian politician and trade unionist. He was Secretary of the Australian Council of Trade Unions between 2000 and 2007...
, presented the legislation to Parliament on 14 May 2009. The legislation proposed for the scheme to be phased in from 1 July 2011, with carbon trading permits to cost a fixed $10 per tonne of carbon in 2011–12. Permit costs will transition to a fully floating market determined price from 1 July 2012.
The Senate rejected the legislation on August 13, 2009, despite an intense campaign from the Rudd Government
Rudd Government
The Rudd Government refers to the federal Executive Government of Australia of the Australian Labor Party from 2007 to 2010, led by Kevin Rudd as Prime Minister. The Rudd Government commenced on 3 December 2007, when Rudd was sworn in along with his ministry...
. Conservatives and industry associations said the proposed legislation would excessively damage the economy, while environmentalists denounced it as insufficient to curb emissions. In the end, 42 of the 76 Senators defeated the bill.
In November 2009, the then Opposition leader, Malcolm Turnbull
Malcolm Turnbull
Malcolm Bligh Turnbull is an Australian politician. He has been a member of the Australian House of Representatives since 2004, and was Leader of the Opposition and parliamentary leader of the Liberal Party from 16 September 2008 to 1 December 2009.Turnbull has represented the Division...
and the Prime Minister, Kevin Rudd
Kevin Rudd
Kevin Michael Rudd is an Australian politician who was the 26th Prime Minister of Australia from 2007 to 2010. He has been Minister for Foreign Affairs since 2010...
reached an agreement on the scheme after a number of significant changes were made. Deep divides within the Coalition ranks on the amended scheme and on the legislation in general resulted in Malcolm Turnbull
Malcolm Turnbull
Malcolm Bligh Turnbull is an Australian politician. He has been a member of the Australian House of Representatives since 2004, and was Leader of the Opposition and parliamentary leader of the Liberal Party from 16 September 2008 to 1 December 2009.Turnbull has represented the Division...
being displaced as Opposition leader prior to the Senate vote on December 2, 2009 however, resulting in Liberal opposition to the amended scheme and subsequent Senate rejection of the legislation for the second time. Despite two Liberal senators breaking ranks and joining Labor in support, the Government lost the vote with 33 in support and 41 against. Joining the Liberals in voting against the scheme were the Nationals, Greens, Family First and independent senators.
The carbon emissions legislation, as amended after negotiation with the Opposition, was introduced in the House of Representatives for the third time in the first week of February 2010. If the House approves the amended CPRS, the bills will again be presented to the Senate. If the Senate passes the bills, with or without acceptable amendments, then the CPRS legislation will become law.
If the Senate fails to pass, rejects outright, or makes unacceptable amendments, the bills will fail for a third time. The Government could then use the trigger and seek a double dissolution
Double dissolution
A double dissolution is a procedure permitted under the Australian Constitution to resolve deadlocks between the House of Representatives and the Senate....
.
In the wake of Parliament’s August rejection of a carbon emissions legislation, the Senate however did pass on a Renewable Energy Target Bill, after it was decoupled from the emissions bill. This new law requires that renewable sources supply 20 percent of the country’s electricity by 2020.
Coalition climate change policy
The Tony Abbott
Tony Abbott
Anthony John "Tony" Abbott is the Leader of the Opposition in the Australian House of Representatives and federal leader of the centre-right Liberal Party of Australia. Abbott has represented the seat of Warringah since the 1994 by-election...
led Coalition's direct-action climate policy proposals were released on 2 February 2010. The central pillar of its plan is an emissions reduction fund (ERF) which will be used to fund activities of businesses and farmers that reduce emissions and sequester carbon. Worth A$300 million in 2011/12 and increasing to A$1 billion by 2014/15, the Coalition claims that this measure will achieve a 5 per cent reduction in emissions by 2020 at a fraction of the cost of the government’s CPRS.
Questions have been raised on the effectiveness on these policies however. A report by carbon market analysts at Bloomberg New Energy Finance claims that the Coalition's climate change policy would cost taxpayers more than twice as much as the current Government's emissions trading scheme. The report concluded that the Government's scheme would cost the budget A$1.5 billion over the first four years - less than the A$3.4 billion of the emissions reduction fund proposed by Opposition Leader Tony Abbott
Tony Abbott
Anthony John "Tony" Abbott is the Leader of the Opposition in the Australian House of Representatives and federal leader of the centre-right Liberal Party of Australia. Abbott has represented the seat of Warringah since the 1994 by-election...
.
The report further argues that the Government's emissions trading scheme is considered more cost effective because it is a market-based system with penalties to force businesses to find the cheapest cuts. An emissions cap will also ensure that targets are achieved.
Australia’s emissions reduction target
The Australian Government in February 2010 submitted its plans for incorporation into the Copenhagen Accord
Copenhagen Accord
The Copenhagen Accord is a document that delegates at the 15th session of the Conference of Parties to the United Nations Framework Convention on Climate Change agreed to "take note of" at the final plenary on 18 December 2009....
for cutting emissions by the year 2020. Australia will have a 5 per cent reduction target with no conditions applying and will only lift its target to 15 per cent or 25 per cent if countries like China, India and the United States agree to verifiable reductions. This is in line with previous Government announcements on Australian emissions reduction levels.
International emissions trading developments
The legislative process in Australia is being undertaken in an environment of continuing uncertainty because the future international policy regime remains unresolved, and ultimately Australia’s national emissions reduction target is dependent on this international regime.Australia is not the only country introducing emissions trading legislation. In the United States, the American Clean Energy and Security Act
American Clean Energy and Security Act
The American Clean Energy and Security Act of 2009 was an energy bill in the 111th United States Congress that would have established a variant of an emissions trading plan similar to the European Union Emission Trading Scheme...
, otherwise known as the Waxman-Markey Bill (after Democratic politicians Henry Waxman
Henry Waxman
Henry Arnold Waxman is the U.S. Representative for , serving in Congress since 1975. He is a member of the Democratic Party. He is considered to be one of the most influential liberal members of Congress...
and Ed Markey
Ed Markey
Edward John "Ed" Markey is the U.S. Representative for , serving since 1976. He is a member of the Democratic Party. The district includes most of Boston's northern and western suburbs, such as Medford and Framingham. Markey is the Dean of both the Massachusetts and New England House delegations...
), was formally introduced to the House Committee on Energy and Commerce in mid-May 2009.
The Bill was initially offered as a 648-page discussion draft to the House Committee on Energy and Commerce in March, after many hearings on the major issues. The discussion draft was a proposal to establish a national renewable energy standard and an economy-wide cap and trade program to address climate change. The proposal underwent several revisions (over 400 amendments) in the House Committee on Energy and Commerce and the Sub-committee of Energy and Environment before passing out on 21 May 2009, by 33 votes to 25. The bill was approved by the full United States House of Representatives
United States House of Representatives
The United States House of Representatives is one of the two Houses of the United States Congress, the bicameral legislature which also includes the Senate.The composition and powers of the House are established in Article One of the Constitution...
on 26 June 2009. As of February 2010, the United States Senate
United States Senate
The United States Senate is the upper house of the bicameral legislature of the United States, and together with the United States House of Representatives comprises the United States Congress. The composition and powers of the Senate are established in Article One of the U.S. Constitution. Each...
was still debating on whether to pass the bill and establish such a scheme.
The Bill proposes to reduce American emissions by 3 per cent of 2005 levels by 2012, 17 per cent by 2020, 42 per cent by 2030, and 83 per cent by 2050. These reduction targets are consistent with stabilisation at 450ppm CO2-e, although the original proposed target of 20 per cent of 2005 levels by 2020 was negotiated down to 17 per cent. Furthermore, this 17 per cent target was officially stated as the goal in the United States submission for incorporation into the Copenhagen Accord
Copenhagen Accord
The Copenhagen Accord is a document that delegates at the 15th session of the Conference of Parties to the United Nations Framework Convention on Climate Change agreed to "take note of" at the final plenary on 18 December 2009....
in January 2010.
Outcomes of COP15
The 2009 United Nations Climate Change Conference2009 United Nations Climate Change Conference
The 2009 United Nations Climate Change Conference, commonly known as the Copenhagen Summit, was held at the Bella Center in Copenhagen, Denmark, between 7 December and 18 December. The conference included the 15th Conference of the Parties to the United Nations Framework Convention on Climate...
, held in Copenhagen in December last year, aimed to establish a new post-2012 international agreement to supersede the Kyoto Protocol. Despite fundamental challenges remaining unresolved in terms of depth and distribution of emissions cuts, the meeting confirmed effective climate management as a political priority and some concrete outcomes were achieved in relation to financing, deforestation and adaptation.
One of the first processes linked to the Copenhagen Accord
Copenhagen Accord
The Copenhagen Accord is a document that delegates at the 15th session of the Conference of Parties to the United Nations Framework Convention on Climate Change agreed to "take note of" at the final plenary on 18 December 2009....
is the submission of national emission targets by 2020 for incorporation into the Annex. The Accord engages all the largest emitters and introduces a new bottom-up architecture based on national pledges rather than top-down Kyoto-style targets and timetables. The structure will allow parties to nominate their commitments within an overall objective of limiting global temperature rise.
In addition to the submission of national pledges, the Accord also included provisions of scaled up, new and additional, predictable and adequate funding to developing countries from developed countries to support mitigation, including for REDD plus, adaptation, technology development and transfer, and capacity building. US$30 billion is expected for the period between 2010 and 2012, with this amount increasing to US$100 billion a year by 2020.
The focus is now on COP16, to be held in Mexico City in December 2010. The machinery of the UNFCCC will facilitate ongoing negotiations in the lead up to that meeting, and the mandate for the primary working groups has been extended to accommodate this.
See also
- American Clean Energy and Security ActAmerican Clean Energy and Security ActThe American Clean Energy and Security Act of 2009 was an energy bill in the 111th United States Congress that would have established a variant of an emissions trading plan similar to the European Union Emission Trading Scheme...
- Carbon Pollution Reduction SchemeCarbon Pollution Reduction SchemeThe Carbon Pollution Reduction Scheme was a proposed cap-and-trade system of emissions trading for anthropogenic greenhouse gases, due to be introduced in Australia in 2010 by the Rudd government, as part of its climate change policy. It marked a major change in the energy policy of Australia...
- Climate of AustraliaClimate of AustraliaThe climate of Australia varies widely, but by far the largest part of Australia is desert or semi-arid – 40% of the landmass is covered by sand dunes. Only the south-east and south-west corners have a temperate climate and moderately fertile soil...
- Emissions tradingEmissions tradingEmissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
- European Union Emissions Trading Scheme
- Effects of global warming on AustraliaEffects of global warming on AustraliaPredictions measuring the effects of global warming on Australia assert that climate change will negatively impact the continent's environment, economy, and communities...
- Garnaut Climate Change ReviewGarnaut Climate Change ReviewThe Garnaut Climate Change Review was a study by Professor Ross Garnaut, commissioned by then Opposition Leader, Kevin Rudd and by the Australian State and Territory Governments on 30 April 2007...
- Greenhouse gasGreenhouse gasA greenhouse gas is a gas in an atmosphere that absorbs and emits radiation within the thermal infrared range. This process is the fundamental cause of the greenhouse effect. The primary greenhouse gases in the Earth's atmosphere are water vapor, carbon dioxide, methane, nitrous oxide, and ozone...
- IPCC Fourth Assessment ReportIPCC Fourth Assessment ReportClimate Change 2007, the Fourth Assessment Report of the United Nations Intergovernmental Panel on Climate Change , is the fourth in a series of reports intended to assess scientific, technical and socio-economic information concerning climate change, its potential effects, and options for...
- Kyoto ProtocolKyoto ProtocolThe Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change , aimed at fighting global warming...
- New Zealand Emissions Trading SchemeNew Zealand Emissions Trading SchemeThe New Zealand Emissions Trading Scheme is a national all-sectors all-greenhouse gases all-free allocation uncapped emissions trading scheme...
- Stern Review on the Economics of Climate Change
- United Nations Framework Convention on Climate ChangeUnited Nations Framework Convention on Climate ChangeThe United Nations Framework Convention on Climate Change is an international environmental treaty produced at the United Nations Conference on Environment and Development , informally known as the Earth Summit, held in Rio de Janeiro from June 3 to 14, 1992...
- Waxman-Markey
External links
- Asia-Pacific Emissions Trading Forum
- Carbon Pollution Reduction Scheme
- Copenhagen Conference 2009
- COP 16
- European Union Emissions Trading Scheme
- International Emissions Trading Association
- New Zealand Emissions Trading Scheme
- Pew Center on Global Climate Change
- United Nations Framework Convention on Climate Change