Australia and the European Union will join forces in the carbon market and the move could pave the way for the formation of a global emission trading system.
Australia’s involvement will provide much needed support for European climate policy that has faced several problems over the last decade, including fraud and theft, and the move reaffirms their commitment to reducing carbon emissions and mitigating the effects of climate.
The move is viewed as the first advanced international partnership in emissions trading and could help generate valuable momentum towards establishing an effective international carbon market.
Focus is now shifting towards China, which is developing carbon market projects in major cities including Beijing and Shanghai. South Korea are also developing in the sector and are planning to launch a carbon market in 2015 which could lead to their involvement in an international market.
Australian businesses could provide a major and sorely needed influx of capital and they will be able to buy European permits to emit carbon from 2015. Two-way trade will be permitted from 2018.
Australia's carbon tax, instituted 2 months ago, has been a serious issue in domestic politics and the government has suggested tranfering the scheme to a market based system. However, the A$15 a tonne carbon price floor will be abandoned for the partnership with the EU amid claims from businesses that it has reduced competition in the market and driven up costs.
