AETS

The Australian Emissions Trading Scheme (AETS) is set to commence in 2010. Emissions intensive businesses will need to engage in the carbon economy created by the AETS. 

Will you be affected? 

The economic sectors which are likely to be included in the AETS are stationary energy, industrial processes, fugitive emissions sources, transport and waste.  

How will the AETS operate?

The design and structure of the AETS has yet to be finalised but these are some of the likely outcomes.  

• The AETS is a ‘cap’, ‘allocate’ and ‘trade’ scheme
• Total emissions in the economy will be capped at the desired level, probably based on Australia’s international emissions reduction commitments and reported emissions under the NGER Act.
• Each permit is likely to represent one tonne of emissions. Permits will be allocated into the economy through auction (most likely) or free (less likely). Businesses will be allowed to emit GHGs equivalent to the number of permits that they hold. 
• A market for permits will develop where permits are traded at the market price. This will be the ‘price of carbon’. Estimates of this price vary between $20 and $100 per tonne of CO₂ equivalent emissions.  
• The cost of carbon permits for larger businesses will run into the millions of dollars.  
• Failure to secure sufficient permits to match emissions will result in heavy penalties.  

Are you ready?

• Do you have the optimal strategy for deciding whether to reduce emissions (based on a company’s marginal abatement cost of emissions reduction), acquire permits or acquire offsets? 
• Do you have the systems in place to compare emissions to permits held, trade in permits and account for permit trades? 
• Do you have the resources to remain abreast of developments in the design and implementation of the AETS? 

Contact ELP now for advice and assistance