Australia and Europe to Link Emissions Trading Systems

The Australian Minister for Climate Change and Energy Efficiency, the Hon Greg Combet MP, and the European Commissioner for Climate Action, Connie Hedegaard, announced yesterday (August 28) 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 July 1, 2018.  Under this arrangement, businesses will be allowed to use carbon units from the Australian emissions trading scheme or the European Union’s Emissions Trading Scheme (EU ETS) for compliance under either system.
To facilitate the link, the Australian Government will make two changes to the design of its carbon price: the price floor will not be implemented; and 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% of their liabilities through purchasing eligible international units, only 12.5% of their liabilities will be met by Kyoto units.
While formal negotiations are under way, an interim link will be established, whereby Australian businesses will be able to use EU allowances to help meet liabilities under the Australian ETS from July 1, 2015.