Australian Factories Meet Carbon Deadline Ahead of Cap-and-Trade

Australian factories and power stations handed in carbon permits and offsets covering 212 million metric tons of greenhouse gases emitted in the past year as the nation prepares for a cap-and-trade program in 2015.

Companies were obliged to surrender permits covering 75 percent of their emissions in the year to June 30 by an interim deadline on June 17, data from the nation’s Clean Energy Regulator show. The balance of allowances must be surrendered by Feb. 3.

The country introduced a charge for carbon emissions last year as Prime Minister Julia Gillard proceeded with plans for a trading system that has drawn criticism from opposition politicians. Liberal party leader Tony Abbott pledged a “blood oath” to dismantle what he calls a toxic tax on carbon and electricity if he wins a Sept. 14 general election.

“Last week’s provisional surrender would have been the first time that many Australian companies have had to pay for their emissions,” Hugh Bromley, an analyst at Bloomberg New Energy Finance in Sydney, said by e-mail June 21. “This is an important step forward as Australia’s per capita emissions are the highest in the OECD.”

Australia’s carbon regime will shift from a flat charge of A$23 ($21.12) to A$25.40 a ton from 2012 through 2015, to a floating-price market system from 2015, according to legislation passed two years ago.

Permit Surrender

All liable entities fulfilled their reporting obligations, according to a June 21 e-mailed statement from the Clean Energy Regulator. Companies surrendered permits covering 99.75 percent of their discharges, the regulator said.

A total of 256 companies handed over allowances by the June deadline, the data show. About 120 more firms are expected to submit permits by the Feb. 3 deadline, Bromley said.

Companies must top up their quota with permits purchased directly from the government, or carbon offsets generated by projects in Australia that reduce emissions by cutting pollution from livestock, landfills and deforestation. Companies surrendered 1.7 million Australian Carbon Credit Units in the June compliance, data from the regulator show.

From 2015, companies will be allowed to use European Union allowances, or EUAs, and United Nations Certified Emission Reductions for a portion of their compliance, according to the system’s rules.

“Some liable entities will be looking beyond the fixed-price period to take advantage of low carbon prices in the international CER and EUA markets,” Bromley said. “However, political uncertainty makes this too risky a proposition for many companies.”

The Clean Energy Regulator will publish data on those companies that failed to surrender enough permits to cover 75 percent of their annual emissions on June 28, according to its website.

“We believe almost all entities who were required to provide a provisional surrender did so,” Bromley said.

-- Editors: Andrew Reierson, John Buckley

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