May 30, 2007

Deutsche Bank releases Australian carbon trading research report

Deutsche Bank today released a detailed research report on carbon trading in Australia, ahead of the Federal Government’s Task Group on Emissions Trading, who are expected to report later this week.

John Hirjee, Energy and Utilities Analyst, reviewed the Australian listed energy and utility companies likely to be affected by a carbon emissions scheme.

“While analysis on individual company greenhouse emissions is still in its infancy, we expect European precedents to be the guiding light for any scheme under consideration in Australia,” he said.

The European Union Emissions Trading Scheme (EU ETS) was implemented in January 2005, and is the world’s largest jurisdiction based emissions trading scheme.

The report considers the following issues critical to an Australian carbon trading scheme:

  • Flexibility of design: Given Australia's ongoing drought has already driven electricity prices to record levels, how can a carbon trading scheme be designed to avoid excessively over dampening Australia's economy?
  • Timing: over what term will the trading scheme take place? If the time frame is too short there will be insufficient time for industry to make changes, resulting in supply shocks.
  • Coverage: will some sectors be exempt from trading requirements, such as households and transport are in Europe? How will the energy and mining sectors' exports be treated?
  • Issuing and trading credits: will carbon credits be issued or auctioned? Will there be grandfathering arrangements for particular industries? Will trading with international schemes be permitted?
  • Interaction with existing schemes: how will the recommendations affect initiatives such as Australia's MRET system, or state-based carbon emissions policies?

Deutsche Bank’s carbon expert, Mark Lewis, is expected to visit Australia next month.

For further information, please call:

Cathy Knezevic
+61 2 8258 2792

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