Planet Ark : ANALYSIS - Australian States' Carbon Trading Faces Battle: "ANALYSIS - Australian States' Carbon Trading Faces Battle


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AUSTRALIA: April 3, 2006

SYDNEY - Australia's states hope to do what their national government won't -- cut greenhouse gases by developing a carbon credits market -- but disagreements over emissions limits are already threatening to dampen the plan.

An inter-state working group has said it favours a 'cap and trade' system to encourage clean energy and clear up the regulatory outlook for power sector investors in one of the globe's most intensive producers of the greenhouse gas.
It could model itself on the pact by nine Northeastern US states to establish an emissions trading market by 2009, in contrast to both the United States and Australian government's opposition to emissions trading under the UN Kyoto Protocol.
But the Australian states, united politically in opposition to the right-wing national government, appear divided over where to set the bar due to wide regional variations in power plant fuel, typically the biggest emitter of carbon dioxide.
'For such schemes to really work you need to change the long-term investor mix by disadvantaging existing players,' said Ian MacGill, senior lecturer at the Centre for Energy and Environmental Markets at the University of New South Wales.
Regions that depend on coal-fired power such as Victoria appear reluctant to impose stiff financial penalties that could threaten the viability of their major energy producers.
'Scheme design is critical so we don't disaffect Victoria's brown coal industry,' Victoria's energy minister, Theo Theophanous, said this week.
He said his government supported an inter-state emissions trading schem"