
%0 Journal Article
%A Warburton, A.M. 
%A Singleton, S.E. 
%T THE EMERGING MARKET IN CARBON CREDITS IN AUSTRALIA
%J The APPEA Journal
%D 2007/06/30
%V 47
%N 1
%P 347-361
%K 
%R https://doi.org/10.1071/AJ06025
%U https://www.publish.csiro.au/paper/AJ06025 
%X Climate change policy in Australia is in a state of upheaval.The Federal Government, after years of opposing mandatory carbon constraints, has changed tack and is now investigating emissions trading as a possible means of reducing greenhouse gas emissions.With a federal election looming, the Labor Opposition has committed to ratifying the Kyoto Protocol and reducing greenhouse gas emissions by 60% (against 1990 levels) by 2050. Not to be left out, the State governments say they will introduce an emissions trading regime themselves, if the federal government of the day does not move quickly enough.It now seems clear that there will be some form of carbon price signal in Australia within the next five to 10 years. What is unclear is the form that the carbon constraints might take.Amid this policy uncertainty, large energy producers and users are starting to invest in emissions reduction projects in Australia, as a form of risk management for potential future carbon liabilities. These projects are unusual in that the carbon rights that are being traded are not recognised under any existing Australian statutory scheme, nor are they part of the Kyoto mechanisms. Consequently, they are not recognised by law and do not have any real value today. Their value is largely potential future value under some form of emissions trading scheme or carbon tax regime (which places a price on carbon emissions).These projects raise some novel issues for project developers and purchasers. What is the carbon right that is being sold? How do you frame it to maximise flexibility for use under a future carbon constraint regime?How do you ensure ongoing validity of the carbon right for an indefinite period into the future? For carbon sink projects, the purchaser will want some comfort regarding permanence of abatement of CO2 emissions.Project developers are often small start-up companies with few assets and limited cash flow. They may not be in a position to offer securities for performance. What mechanisms can a purchaser use to assist with start-up funding and also secure the rights they are purchasing?What pricing structures are available, particularly for future sales, against the background of a possible future carbon market?What obligations should the developer/seller have in relation to verification, monitoring and reporting of avoided emissions?How might projects be structured to involve multiple buyers to support the project and facilitate development of a market? 
