In brief – Majority support for linking AU and EU emissions trading schemes

Earlier this month the House of Representatives Economics Committee gave the green light to link the AU and EU emissions trading schemes. An independent expert has recommended the imposition of a carbon tax on imports from countries without a carbon tax.

Majority view that government treaties can address loss of autonomy

The emissions trading schemes of Australia and Europe will be linked. (Please see our earlier article Three must-know developments in carbon, energy and mining.)

The advisory report prepared by Labor members and one independent, Clean Energy Amendment Bills 2012, recommended that the relevant bills be passed. A Dissenting Report prepared by Liberal members did not support the changes.

Committee members from both parties noted concerns that linking schemes could involve a loss of autonomy for the Australian ETS, but the majority view was that this could be addressed via government treaties.

Carbon tax on imports from countries without a carbon tax

Another concern was that linking the two schemes might make Australian businesses less competitive than businesses in countries not bound to the EU ETS. One solution might be for Australia to impose a carbon levy on imports from countries without a carbon tax.

This was discussed recently in an ABC interview with Sir Chris Llewellyn Smith, Oxford University's Head of Energy Research and a former head of CERN, the European Organization for Nuclear Research.

He said that such an impost should not be seen as a levy, but as a correction for unfair subsidy from countries that do not have a carbon tax. His view was that it would level the playing field between Australian companies that export and other companies that import.

A spokesman for Climate Change Minister Greg Combet said that a carbon duty on imports would be difficult to implement and contrary to the interests of open trade.

However, it is likely that the imposition of a carbon tax on imports from countries without a carbon tax will continue to be debated in the future.