Jurisdiction - Australia
Australia – Emissions Trading Details Released.
15 July, 2013

Legal News & Analysis – Asia Pacific – Australia – Environment


Following announcements of its proposed earlier move to emissions trading on 1 July 2014, the government has released a policy summary setting out fuller details. (Starting Emissions Trading on 1 July 2014, Policy Summary).


See our recent articles for more information on the initial announcement and budget cuts. (see article published previously on the Initial Accouncement by clicking here).


Key points from the government’s policy summary are:

Use of international units

  • Liable entitles will be able to use eligible international units, including EU and Kyoto Protocol units, for up to 50% of their annual liability.
  • A sublimit of 6.25% for 2014-15 and 12.5% from 2015-16 will apply to using Kyoto Protocol Clean Development Mechanism and the Joint Implementation units.
  • EU units can be used from 1 July 2015, 7 months before the 1 February 2016 final surrender date for the 2014-15 compliance year.

Setting of pollution cap for 2014-15

  • A pollution cap (the number of Australian carbon units auctioned for each compliance year) will be set by the government for 2014-15 on the recommendation of the Climate Change Authority (CCA) to be given by 28 February 2014.
  • The default cap arrangements will be brought forward, such that the cap for 2014-15 will be 25 million tonnes below covered emissions in 2012-13, if the government does not set a cap for 2014-15 by 1 July 2014.

Auctioning of Carbon Units


  • Seven auctions will be held for the 2014-15 compliance year, including:


    • two advance auctions of 20 million units at each, between February and June 2014;
    • four auctions during 2014-15; and
    • one action between 30 June 2015 and the 1 February 2016 final surrender date.
  • The auctions will have an opening price of 80% of the EU allowance price.

Carbon Farming Initiative units

  • Use of Carbon Farming Initiative carbon credits will be unlimited from 1 July 2014.


Banking and borrowing

  • 2014-15 carbon units can be banked for use in later compliance years.
  • 2015-16 carbon units can be borrowed to meet up to 5% of 2014-15 compliance year liability.

Compensation programs


  • No changes will be made to the Jobs and Competitiveness Program, though the Productivity Commission will be reviewing the program during 2014-15.
  • The free allocations for coal-fired generators for 2015-16 will be brought forward to 2014-15 and discontinued thereafter.

Price ceiling

  • Following consultation, a carbon unit price ceiling will be set for 2014-15 by 1 July 2014.



  • Interested parties will have the chance to make submissions in relation to both the draft legislative changes and the 2014-15 pollution cap to be recommended by the CCA.



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