Australia May Make Additional Exclusions to Eligible CO2 Offsets

Australia said it may introduce further restrictions of the use of international offsets in its carbon program planned to start in July next year.

Australia already proposed to ban use of some industrial-gas emission offset credits, including those from projects that cut hydrofluorocarbon-23 gas, according to an e-mailed response to questions by the office of Greg Combet, the nation’s climate change minister in Canberra, the nation’s capital.

“Further restrictions on the use of international permits may be added on the advice of the Climate Change Authority, a new independent body that will be established to advise the government on key aspects of the carbon-price mechanism,” according to the statement.

Other exclusions already flagged include credits from nuclear-energy projects, large-scale hydro-electric plants that are not consistent with World Commission on Dams criteria adopted by the European Union, as well as temporary Certified Emission Reductions, it said.

Credits from so-called HFC-23 gas projects have made up more than half of supply in the United Nations’ main offset program, the world’s largest. The EU has banned them for use in its cap-and-trade program starting May 2013.

Australian demand for international offsets in the five years through June 2020 will be about 330 million metric tons, or an average 66 million a year, Marisa Beck, an analyst for Bloomberg New Energy Finance in London, forecast on Aug. 17.

China may agree to sell greenhouse gas offsets to Australia, as EU factories and power stations are prevented from buying some credits from the most populous nation, Norton Rose LLP said Aug. 16.

Australian allowance prices will probably track UN Certified Emission Reduction credits when the country’s emissions-trading system begins in July 2015, because emitters may be able to use UN offsets for 50 percent of their compliance, according to rules of the proposed program. In the EU polluters won’t be able to use offsets from China after 2013 unless projects are registered by the end of 2012 according to that system’s rules.