The purpose of building an emissions trading system is to make available to business the lowest cost options to abate greenhouse gas emissions and a critical prerequisite for the smooth operation of a robust emission trading scheme is a national emissions trading registry (Registry) which tracks emission permit creation, transfers and acquittals. Domestic or international offsets are also tracked by the Registry as will any mandatory permits or offsets acquitted for voluntary purposes.
The Australian government has recently released a tender calling for entities to submit proposals for the design and operation of such a Registry. Potential operators will need to demonstrate not only that they can provide the technology and the skills to manage the Registry within Australia, but also that they can create and maintain links with international registries to which the Australian ETS has been linked.
In addition, the Registry needs to support the daily trading of permits and offsets occurring via the various emissions trading platforms. There are at least three registries operating in Australia that facilitate the exchange of mandatory and voluntary environmental instruments.
The release of the preliminary ETS design describing a number of rather tentative transitional measures before we have a fully blown ETS is another carefully installed chapter in the Federal Government election promise of ratifying the Kyoto protocol, and moving towards an emissions trading scheme by 2010.
It is refreshing to observe Ross Garnaut's calls to resist the urge to heed the dire warnings from heavy industries, as was not the approach of the previous Government, a passionate protector of large GHG emitters from any carbon impost.
We will have to wait for the final chapters of the ETS design to observe how much of Garnaut's rather refreshing firm handed proposals will ultimately be incorporated in the final ETS design. One proposal of note is Garnaut's suggestion to establish an Independent Carbon Bank which should considerably decrease the opportunity for industry to lobby for better permit conditions as trajectories are adjusted.
Following industry pressure at the start of the European ETS, many permits were supplied free of charge and companies passed on the cost of permits regardless of the fact that they were acquired free of charge. The preliminary Australian ETS design has indicated that the majority of permits will be auctioned, enabling price mechanisms to take effect and reveal the commercial value industry places on emissions.
Compensation for households, TEEI's and power generators will be provided in addition to their being a permit price ceiling, all of which counteracts the benefit of price discovery and dilutes the price signal required to change the way we generate and consume power. It is unfortunate that there are already signs that the Government is bending to industry groups before the ‘lobbyfest' has even begun.
The real pointy bit of the ETS design, from an industry perspective, is the the Emissions Cap and how the required reduction is divided up between the sectors; these details are expected in the White Paper due for release in December 2008.
However, an emission trading scheme is only one of a number of mechanisms available, and required, to slow the progress of climate change. In order to fully address climate change we will ultimately need to change how modern society promotes material consumption and fossil fuel powered generation. We need a paradigm shift; one that will take us away from fossil fuels to cleaner, safer forms of energy production.
And it won't be easy, because fossil fuels are embedded in every stage of our lives. There's almost nothing we do, or consume, that doesn't require fossil fuels on some level, which is why the changes will need to be both deep and extensive.
It is very possible to maintain our current lifestyles with the clean energy and associated enabling technologies such as hydrogen power available today. It is time to halt the misinformation surrounding renewable energy, including the most irritating myth that it is not possible for renewable energy technology to supply base load power, what a load of convoluted rubbish!
Putting a price on carbon will assist in dispelling the resistance to the clean energy technologies available and begin the necessary societal changes. But while the required adjustment will necessarily work its way into every corner of our lives, it will also benefit us in ways we won't expect. Moving away from fossil fuels to different modes of transport and energy production will result in cleaner cities, healthier populations and closer communities, and maybe release us from our cars and back to the footpaths.
Currently working as Technology and Offset supply manager at the Perth-based Australian Climate Exchange, Manus Higgins is a qualified Marine Scientist with an MSc in Renewable Energy Technologies and accreditation with the Business Council for Sustainable Energy. Manus has spent the last 7 year's developing and analysing sustainable energy systems, energy policy and energy and greenhouse gas reduction in heavy industry.