CO2 no magic pudding: AGL

Int’l offsets need shared targets: "AGL is less supportive of the inclusion of international offsets in the proposed emissions trading scheme. The purpose of the emissions trading scheme is to reduce Australian emissions relative to an Australian target (which has been set to achieve a global objective based upon other nations adopting similar initiatives). The inclusion of international offsets will only be environmentally effective if other nations have similar targets over similar timeframes.

Australian consumers will pay: "If international offsets are to be permitted, AGL supports the Taskforce’s recommendation regarding consistency with the mechanisms developed under the Kyoto Protocol. It is important to note that there is no ‘magic pudding’ with regard to emissions trading and international offsets. If international offsets, and in particular Clean Development Mechanism credits, are included in the scheme, Australian energy consumers will effectively be paying for emission reductions in other countries that do not have the same emission reduction obligations.

"Price taker" role most likely:"International carbon trading will only be environmentally effective if all nations adopt agreed targets which are reflected in the level of permits allocated in each emissions trading scheme. The focus of international linkages should be on ensuring that abatement created in Australia is recognised under international treaties (e.g. Kyoto). Careful consideration needs to be given to this issue because of the small size of the Australian carbon and abatement markets. Australia is more likely to be a ‘price taker’ than ‘price setter’ in this context."

Reference: AGL Energy Submission on the discussion paper prepared by the National Emissions Trading Taskforce: Possible Design for a National Greenhouse Gas Emissions Trading Scheme. Contact: Jeff Dimery, General Manager, Merchant Power; Tim Nelson, Manager Carbon and Renewable Strategy, ph: (02) 9921 2516, email: email tanelson@agl.com.au

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