The federal government is providing investment guidance to key sectors of the economy on their role in national decarbonisation efforts and is committed to developing a national carbon market strategy. In a new policy brief released today, the Carbon Market Institute (CMI) highlights seven elements that should be dealt with in that strategy.
“Australia needs a National Carbon Market Strategy that explains how carbon markets can best operate in tandem with the Safeguard Mechanism covering industrial emitters as it evolves and becomes stronger, and details market alignments with emerging policies for energy, transport, land and agricultural sectors,” Connor said.
The CMI policy brief says the Strategy should deal with issues including the interaction with the new Nature Repair Market, and the role of government purchasing in both the carbon and nature markets. The brief was released ahead of a 1 July symposium held by CMI in Parliament House to mark the first anniversary of reforms to the Safeguard Mechanism.
In addition, the Strategy should explain how carbon markets will be used to enhance deep structural transition, and how to address and mitigate the risk of the inappropriate use of carbon markets as a decarbonisation delay tactic.
“The Australian government is finalising six sectoral decarbonisation plans and a national net zero plan,” Connor noted.
“The government has a pre-existing integrated system plan for the National Electricity Market, and a pre-existing nature positive plan,” he said.
“But a blueprint to guide the future of the nation’s carbon market is still to come, and is a critical missing link,” Connor said.
“That’s a major gap, because all sectors of the Australian economy will have to participate in carbon markets that supply high-integrity credits, in order to reach or support their net zero goals,” Connor said.
“Businesses can only effectively plan their own decarbonisation if they have a good understanding of how Australia’s carbon market is likely to evolve to assist them and their guidance, and governance should be clear to the community,” he said.
Connor noted that the Climate Change Authority two years ago recommended that a National Carbon Market Strategy be developed “to establish how Australia will use carbon markets to achieve net zero emissions by 2050”.
The Authority pointed out that the Strategy would also help to uphold the integrity of the carbon credits market – both in the ways they are generated and the ways they are used, and that it would help to build confidence and trust in Australia’s approach, said Connor.
The new CMI policy brief can be found here.
The seven key National Carbon Market Strategy components elaborated in CMI’s policy brief include:
- Strengthening current market-based frameworks and develop a pathway towards a consistent carbon constraint for all sectors of the Australian economy
- Expediting the Government’s proposed legislative and policy reforms following the ACCU Review to enhance scheme governance, transparency and participation model to ensure integrity and facilitate investor confidence in ACCU supply.
- Clarifying the Government’s purchasing role in carbon and nature markets, to support strategic investment priorities and avoid market distortions where the government competes with private market participants.
- Ensuring complementary policy frameworks and regulations facilitate deep structural transition in Australia’s economy and mitigate the risk of inappropriate use of carbon markets that could delay decarbonisation of Australia’s industrial and energy sectors.
- Guiding the carbon market towards increased investment in removal projects, while continuing to support the important role that avoidance credits play in the short to medium term in accelerating the global transition.
- Supporting mutual complementarity between Australia’s carbon and nature markets.
- Guiding Australia’s engagement with international carbon markets, ensuring high integrity outcomes that support Australia’s net zero transition and contribute to global climate action.
Minister for Climate Change and Energy the Hon Chris Bowen MP and CMI Chair Kerry Schott will address the Safeguard Symposium marking the first anniversary of reforms to the Mechanism imposing liabilities on large industrial emitters and the eighth anniversary of that Mechanism commencing under the Coalition Government. Access the Safeguard Symposium event program here.
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About the Carbon Market Institute: CMI is an independent member-based institute that promotes the use of market-based solutions and supports best practice in decarbonisation to limit warming to 1.5ºC. CMI’s around 150 strong membership includes organisations from across the economy, in Australia and the Asia Pacific region. CMI also administers the Australian Carbon Industry Code of Conduct, which was established in 2018 to promote and steward consumer protection and market integrity. The CMI Board updates CMI’s Policy Positions annually, which draw on practical insights from—but are ultimately independent of—members.
Media contact:
- Murray Griffin, CMI communications advisor, murray@earthed.au, or 0400 952 559.
