EARLIER this week the Australian Senate passed the Clean Energy Bill and the associated 18 other Bills that set out the carbon pricing mechanism due to come into effect from July 1, 2012. The so-called big polluters will need to reduce or offset their emissions from that date.
One potential mechanism for offsetting emissions is by buying Kyoto compliant carbon units from overseas.
The Clean Development Mechanism (CDM) established under the Kyoto Protocol is a cornerstone of the existing international greenhouse-gas emissions-trading scheme. It allows emissions to be offset by investing in schemes, for example hydroelectric power and wind farms, in developing countries. But the schemes have to be certified.
About one-fifth of existing Clean Development Mechanisms (CDM) are registered in India, and certified, but they may nevertheless be non-compliant.
That’s according to a recent article in the journal Nature that reported on a 2008 diplomatic cable published by WikiLeaks.
The situation may have improved, but the Nature article suggests it may have actually gotten worst. Then again the United Nations own validation and registration process for the CDMs, like Kyoto itself, is fairly arbitrary and bureaucratic and not particularly focused on emissions reductions.
Now the carbon tax legislation is through the Australian parliament the Australian Regulator will start to auction floating priced carbon units, based at least in part on CDMs. In addition to buying carbon units in the auction process, secondary markets and derivative markets will likely also develop in Australia also linked in to the international greenhouse-gas trading system.
So does this in effect mean Australia will soon be linked in to a type of ‘subprime’ UN compliant carbon trading scheme?
Australia: Carbon tax/pricing mechanism approved – what needs to be done to prepare for it? By Fiona Melville And Jo Garland
Clean-energy credits tarnished: Wikileaks reveals most Indian claims are ineligible. By Quirin Schiermeier.
Nature, Volume 477, pages 517-518