The controversial fixed carbon tax of A$23 per tonne emitted that the 300 worst polluting Australian firms have to pay will begin the transition into an emission trading scheme in July 2015. The change will give the Australian firms more flexibilty in meeting their Carbon reduction goals, whilst also beginning integration into the European Union’s (EU’s) Emissions Trading Scheme (ETS).
The EU ETS was started in 2005 and works on a cap-and-trade principle; a maximum limit is decided on the amount of carbon emitted and then permits are issued to firms, the number of permits is dependant on the past emissions of the firm. Each permit equates to a set amount of carbon released into the atmosphere, so the big polluters will need to by permits off of the low polluters.
This EU-Australia collaberation will begin in July 2015 with a one way trade (Australian firms buying EU permits) with a two way trade being enforced in 2018.