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Australia Promotes Carbon Market With First Trading Licenses

Australia’s Securities and Investments Commission granted the first 11 licenses to trade emission permits in Australia, a sign that a carbon market is taking shape despite a political threat to end the program.

“A market is beginning to develop, premised on the steady flow of issuance of carbon units,” Craig McBurnie, a senior specialist for the commission, said today at the Carbon Expo in Melbourne.

Australia began charging about 300 of its largest emitters a price of A$23 ($24) a metric ton for their greenhouse gas emissions on July 1. While the nation already has started to issue permits under a provision to give them at no cost to companies that can show they are exposed to global competition, Australia’s cap-and-trade system isn’t scheduled to start until 2015, and the program’s future is in doubt because the Liberal party has pledged to discontinue it if it wins elections set for next year.

The investments commission has received 122 applications for Australian Financial Services Licenses from parties planning to trade emission permits and credits, McBurnie said. Applicants include 37 entities that have never had a so-called AFSL before, and 74 from firms that want to extend their licenses to include emission allowances, he said. Any party that trades carbon units or gives advice on such transaction will require an AFSL starting in 2013.

“We are genuinely predisposed to be as generous as we can,” McBurnie said. The commission expects to favor applicants that can demonstrate a history of carbon trading and consulting, and it may recognize trading experience in nations including the U.K., Singapore, Hong Kong and New Zealand, he said.

Australia will be the only nation to classify spot sales of carbon allowances as a financial product, McBurnie said. The country opted for strict rules to discourage the kind of fraud that tainted trading in markets including the European Union, which runs the world’s biggest carbon markets.

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