Australia’s plans to link up with Europe’s emissions trading scheme and carbon price has raised eyebrows, but some industry observers see this as necessary and productve.   It could also prove beneficial for carbon-trading services in Australia as the market expands in the Asia-Pacific region. CSIRO has identified emissions from the shipping industry as detrimental to air quality near land and in ports, with nitrogen oxide and sulphur emissions contribute to photochemical smog that could affect human health. Read more

EU carbon link ‘beneficial’ to local traders

By Chris Zappone for Business Day (29 August 2012):

The government’s decision to link Australia’s future carbon price with Europe’s could be a boon for carbon-trading services in Australia, particularly as the market for the nascent commodity expands in the Asia-Pacific region.

The connection to Europe’s established emissions pricing market will break down barriers between the two regions. Australian businesses competing in such a market will have an advantage as more Asian nations begin pricing greenhouse-gas emissions, industry representatives said.

The government’s move to hitch Australia’s future carbon price to the world’s biggest emissions trading market came as it decided to ditch its previous plan to set a minimum $15 price per tonne of carbon dioxide emitted once the fixed rate – currently at $23 a tonne – ends in 2015.

The carbon tax kicked in on July 1 with the aim of prodding the biggest emitters to reduce emissions of the gas which is contributing to warming global temperatures.

Andrew Grant, managing director of CO2 Group, said the effort to connect emission trading links between Australia and Europe by 2018 “the most profound” aspect of yesterday’s announcement.

“If schemes aren’t linked, we can’t trade internationally so this is so much more beneficial,” Mr Graham said.

Regional push

The change will also give an edge to Australian clean energy firms in Southeast Asia, a region where Europe had dominated until the financial crisis had forced it to scale back their efforts, he said.

Australia had been “a Johnny-come-lately” into that region, but now that it was effectively in the same market, more business could flow, said Mr Grant.

CO2 Group, which provides carbon advisory and other related services, already has business in Singapore and New Zealand. Additional international links give the group an “ability to optimise our assets,” said Mr Grant.

Clean Energy Council deputy chief executive Kane Thornton said short-term price fluctuation around carbon pricing will give way to longer term consistency as Europe’s market is opened up.

“Even though removing the carbon price floor potentially opens us to greater volatility in the market, the link to a larger market covering some 530 million people will help to protect our emissions trading scheme from sudden changes in the price of carbon,” said Mr Thornton.

He sees a potential inflow of $20 billion in investment in low- or carbon-free energy projects that could generate 30,000 jobs over the next decade as a result of the Renewable Energy Target (RET).

Political risk

The chief risk for the renewable energy sector, he believes, is any watering down of the 20 per cent cut in carbon emissions to be achieved by 2020 through the government’s RET review.

“Any perceived benefits from tinkering with the scheme would be undermined by the signals that it sends to investors,” said Mr Thornton. The review concludes at the end of the year.

“We still have the political risk around government and a drastic change of policy,” he said.

Many large companies in Australia want an established market for their carbon exposure said Rob Fowler, who represents the International Emissions Trading Association in Australia and New Zealand.

Links with Europe will expand options for Australian companies to hedge their carbon pricing positions, Mr Fowler said. Further, it will expand opportunities for Australian carbon trading and carbon-offset businesses.

“If Australia can establish and maintain a European link and start to create relationships around carbon that reflect our trade relationships in Asia Pacific, we act as a real interesting pivot in the international carbon environment,” he said.

“Australia as a service provider in these sorts of professional areas has a good history,” said Mr Fowler. “It’s likely we’re going to create a useful financial services industry around that.”

Mr Fowler said Australia also benefited from having a well-regulated financial sector in the eyes of the global investors.

Source: www.smh.com.au

CSIRO Report (31 August 2012):

Australian shipping emissions identified

Ship engine exhaust emissions make up more than a quarter of nitrogen oxide emissions generated in the Australian region according to a recently-published study by CSIRO and the Australian Maritime College in Launceston. Nitrogen oxide is a non-greenhouse gas, unlike similarly named nitrous oxide.

The remainder comes from road and air transport, energy generation, and industrial processes. Global studies indicate that shipping emissions of nitrogen oxide and sulphur contribute to the formation of photochemical smog and particles near land and in ports.

The authors, Dr Ian Galbally from CSIRO Marine and Atmospheric Research, and the Australian Maritime College’s Dr Laurie Goldsworthy estimate that approximately 30 per cent of anthropogenic nitrogen oxide emissions and 20 per cent of oxides of sulphur emissions generated in the Australian region may come from shipping.

These are non greenhouse gases which have the potential to affect the air quality near coastal regions, and have consequences for human health and amenity.

Dr Galbally said around 10 per cent of global shipping freight passes through Australian ports annually. “Shipping is a major driver in the Australian economy, with 753 Mt of international exports worth $202 billion passing through Australian ports in 2008-2009.”

“There is limited knowledge about the emissions from ships in coastal regions and ports in Australia, the effects of these emissions on air quality in the surrounding coastal and portside urban regions, or potential effects on human health” he said.

The ports of Perth, Melbourne, Sydney and Brisbane are located where seasonally-prevailing onshore winds dominate and the pollutants from shipping frequently will be carried into the air-sheds of these major urban population centres.

“We’re seeing increasing regulation of land-based emissions but limited regulation of shipping emissions and expect that in the near-future there will be a need to monitor more closely emissions from shipping,” Dr Galbally said.

The authors commenced this study with measurements of ship exhaust emissions on the coastal cement carrier MV Goliath.

Dr Goldsworthy said it is possible to quantify emissions generated based on knowledge of fuel type, fuel origin, engine size, cargo, and speed.

“We know from previous studies and the Australian Pollutant Inventory that ship emissions off the coast of Australia are substantially larger than in-port ship emissions.”

“Nitrogen oxide and sulphur oxide emissions at sea are comparable in magnitude with other national sources such as energy generation and industry. They are potentially significant contributors to the air-sheds of major coastal cities,” he said.

The study appeared recently in the journal Air Quality and Climate Change.

Source: www.csiro.au