Australia imposed a carbon tax on around 300 of its biggest
polluting companies in July, covering around 60% of emissions.
"Linking the Australian and European Union systems reaffirms
that carbon markets are the prime vehicle for tackling climate
change and the most efficient means of achieving emissions
reductions," Combet said in a joint statement with European
Commissioner for Climate Action Connie Hedegaard.
A full two-way link, by means of the mutual recognition of
carbon units between the two cap and trade systems, is to commence
no later than 1 July 2018. Under this arrangement, businesses will
be allowed to use carbon units from the Australian emissions
trading scheme or the European Union Emissions Trading System (EU
ETS) for compliance under either system.
The move means business in Australia will be able to use EU
allowances to cover Australian liabilities from July 2015 but
European companies will have to wait until 2018 to use Australian
Combet said business had made it clear they wanted more
flexibility on the carbon price once Australia moves to a trading
today, Australian liable entities can purchase EU allowances for
future compliance in Australia" Mr Combet said.
arrangements provide Australian businesses with access to a larger
market for cost-effective emission reductions and provide European
market participants with enhanced business
opportunities" Mr Combet said.
"At the end of the day, I think this is the best public policy
outcome," Combet told reporters, adding Australia was continuing
negotiations on linking its scheme with New Zealand's emissions
Combet said Australia would also impose a new limit on the use
of eligible Kyoto units. Companies will still be able to meet up to
50% of liabilities with international units, but will only be
allowed to meet 12.5% of liabilities with UN-backed Kyoto
The price on carbon emissions is Australia's key policy to fight
greenhouse gas emissions, blamed for global warming.