Population-based quota allocations: Garnaut argued that an international cap and trade carbon trading regime could begin with emission quotas allocated mainly to the rich greenhouse gas producing nations, such as Australia, but probably would gradually move towards a quota distribution based on population. That would favour the developing nations.
Target energy user emissions, not exporters: The "smart way" to structure the regime would be to target emissions of energy users rather than energy exporters. "If Australia exports a lot of coal to Japan, that’s part of Japan’s emissions," he said. "The issue for our coal producers is not what we do in Australia but what other countries are doing." The coal industry, "which has figured prominently in the discussions so far", has a very strong interest in the development of a good international regime, he said.
Global coal demand could fall: "On the whole our coal exports are relatively clean. We may find global coal use falls a lot but our place in the total coal economy improves." However, in the absence of a strong international regime, countries will be tempted to protect their own coal industries. "The easiest coal for China to exclude will be the imported coal. The easiest coal for Germany to exclude will be the imported coal," he added.
The Australian Financial Review, 1/5/2007, p.8