The Australian Government has released a discussion paper as part of a national review of domestic climate policy. The outcomes of the review will be vital to how Australia’s existing climate policies can evolve to meet current and future emissions reduction commitments made under the Paris Agreement.

The Carbon Market Institute has undertaken extensive research and consultation over the last 12 months to provide input into the policy review.


There is widespread recognition in the business community that domestic policy settings will have to tighten in the near future, and that this will inevitably include a form of emissions trading and a carbon price signal. Our approach has been to examine existing policies, and this Submission provides options, considerations and recommendations under four broad categories:

  • The target for emission reductions to meet international obligations;
  • The Emissions Reduction Fund (ERF);
  • The Safeguard Mechanism; and
  • International carbon market developments and linkages.

This Submission summarises CMI’s position and response to the Australian Government’s 2017 review of climate change policies Discussion Paper, released in March 2017.

We believe it is critical that through the review, the Australian Government examines how existing policies can be implemented to ensure the effectiveness, stability and predictability of the domestic policy framework over the long term, and outline the pathway for the economic transition to a zero-carbon economy.

Key positions detailed in the Institute’s submission include that the Australian Government should:

  • Define the long-term emissions reduction goal for the Australian economy beyond 2030 that leads to net zero emissions economy by 2050;
  • Commit an additional $200 million per year to the ERF between 2018-2020 to ensure the continuity of the domestic carbon offset industry until the time it transitions to a market driven by demand under the Safeguard Mechanism;
  • Commit an allocation of more R&D funding for ERF method development;
  • Clarify the options and process to open up market opportunities for the transfer/export of credits created under the ERF into other markets;
  • Determine the specific quantum and/or percentage contribution the Safeguard Mechanism will make to meeting Australia’s existing emissions reduction targets;
  • Provide clarity on the conditions, criteria and process for how emissions baselines under the Safeguard Mechanism will be adjusted to decline in the post-2020 period;
  • Examine options for how the Safeguard Mechanism can evolve into an effective trading system;
  • Confirm the use and eligibility requirements of international units for compliance under the Safeguard Mechanism;
  • Model the factors affecting availability, and future supply and demand for domestic and international units; and
  • Identify and position how Australia could be part of internationally linked carbon markets.

The Carbon Market Institute will continue to engage with the Australian Government throughout the course of the 2017 review, which is due to be completed by the end of 2017. We look forward to providing constructive input into the review process and working towards a stronger and stable transition to a net-zero economy.