UN Carbon Cut

UN carbon cut to cost Australia $870m | The Australian

AUSTRALIA faces the prospect of paying an extra $870 million for greenhouse gas emissions after Kevin Rudd's ratification of the Kyoto Protocol and a new UN target for carbon pollution.

After a year-long review by the UN Framework Convention on Climate Change committee, Australia has been given a tougher target to cut its greenhouse gas emissions.

The UN has reduced the amount of greenhouse gas emissions Australia is allowed to produce by 6.6 million tonnes ayear.

If Australia is above the carbon emissions target at the end of 2012, it will be required tomake up any shortfall by buying carbon credits from other nations.

Continuing growth in carbon emissions in Australia and the new target have led leading global carbon market analyst Point Carbon to estimate a potential extra cost to taxpayers of $870 million in carbon credits in 2012.

"The revision could force Australia to purchase over 30million assigned amount units (AAUs) more than expected, which could cost up to some $870 million, unless it can achieve further emission cuts domestically," Point Carbon's latest Australian emissions report says.

The report adds that the credits Australia would buy are left over from the economic restructuring of former Soviet satellites after the fall of the Berlin Wall and hold "little orno environmental integrity".

The UN's reduction of 6.6million tonnes annually in Australia's emissions comes as the Department of Climate Change predicts that greenhouse gas emissions figures for 2007, to be released soon, will rise 9million tonnes above the levels of 2006.

Climate Change Minister Penny Wong confirmed last night that the UN target had changed but remained confident Australia could meet it in 2012.

"Our current projections, released last December, show we are on track to meet our Kyoto target, so there is no projected shortfall," Senator Wong said last night.

The Government is finalising an emissions trading scheme that is due to begin next year.

The moves come as the global financial crisis puts extra cost pressures on industry, creating turmoil in world carbon markets and prompting claims that European polluters are abusing emissions trading schemes to raise quick finance.

The price of carbon in the European ETS has crashed to a record low in the past two weeks - down from E30 ($59) a tonne to E10 - as heavy carbon polluters sold more than E1 billion worth of carbon credits to raise finance for their businesses.

European cement producers and electricity generators have unloaded carbon credits they do not need because economic growth has crashed. The Rudd Government's updated forecasts estimate Australian industry will have to pay $23.5billion for carbon emission permits in the first two years of the ETS. Point Carbon last week estimated the recession sparked by the financial crisis would cut global greenhouse gas emissions by 500 million tonnes.