| Dear Sustainability Watch Reader,
I am pleased to provide you with your weekly Sustainability Watch newsletter. This week's topic is "Australia's Carbon Tax & Emissions Trading Program."
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Australia's Carbon Tax & Emissions Trading Program
As of August 2012, the International Emissions Trading Association (IETA) welcomed Australia's announcement that they would link their greenhouse gas emissions trading programs with the European Union. Dirk Forrister, President and CEO of IETA, hailed this development as a "landmark" and a "first of its kind in having two major economies link their carbon pricing programs."
The new link between the EU Emissions Trading Schemes (ETS) and Australia will commence in an interim period between 2015-2018, will full integration into the EU ETS by 2018. Australia began their emissions trading program in July 2012, and quickly devised an international plan for stronger, more accurate caps on carbon trading.
Although still far off, the linkage between Australia and the EU ETS showcases the possible benefits of constructing a new international framework that other countries can use when implementing their own carbon trading systems. Other countries can track, count, and comply in harmony with the already cemented Australia and EU ETS systems.
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Executive Summary
Climate change legislation has been an incendiary issue in Australian politics since the turn of the century. Labor and conservative governments in power have repeatedly failed to reach a consensus on a climate policy, despite criticism from voters that are eager for a political solution. Australia is responsible for nearly 1.5% of global greenhouse-gas emissions. However, because it is highly dependent on coal to generate its electricity, Australia is also one of the highest emitters of these gases per capita. Australia also has a huge mining sector that exports coal to China and India.
In 2011, Julia Gillard was elected prime minister. Gillard has appointed a multi-party parliamentary committee to decide how Australia should make its worst polluters pay for emissions. The committee will decide by the end of 2011 on how put a price on greenhouse-gas emissions. Potential methods include an emissions-trading scheme, a carbon tax, or some combination of both plans. Gillard and a coalition of members of Parliament are pushing ahead with plans to price carbon emissions into their economy. The plan includes a carbon tax, and if it passes, it would be a significant legislative effort. Australia would be the first country of its size to impose a price for carbon emissions on a national level.
The plan includes provisions for electric utilities, the transportation sector, industrial factories, and controlling emissions that escape as a result of coal and metals mining and oil and gas production. The initial phase of the plan includes a carbon tax which would require polluters to pay a price on each ton of carbon they emit into the environment. During an initial phase of three to five years, carbon prices would increase annually. After the initial phase, Australia would start a transition to an emissions trading program, also known as a cap-and-trade program, in which a maximum national limit (cap) is established for carbon-based emissions and companies are issued allowances for the maximum amount of pollution that can be emitted. The carbon allowances can be traded and sold on the market, allowing the companies that can comply with emission reduction efforts to sell their unused allowances to companies that are not able to make required reductions.
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