Chapter 3
The international trading of carbon emission permits
Introduction
3.1
This chapter discusses the short comings of international carbon
markets. The experience of international markets is important because of how
the Government's proposed scheme will transition from a fixed price on carbon
to a flexible price under an Emissions Trading Scheme (ETS) on 1 July 2015.[1]
From 1 July 2012 to 30 June 2015, the carbon price will be set by the
Australian Government. After 1 July 2015, the price will become flexible,
largely determined by the market. The proposed scheme will allow up to 50 per
cent of permits to be imported from ETSs overseas, therefore, it is important
that these schemes be trustworthy.
3.2
Current experience in overseas jurisdictions appears to show that credible,
stable and reliable mechanisms to facilitate the international trade in permits
are not emerging. This raises serious questions about the reliability of the Treasury's
modelling and the actual operation of the proposed Australian regime from 1
July 2015, which draws so heavily on overseas abatement to offset Australia's
domestic emissions.
3.3
During the flexible price period, which commences on 1 July 2015, the Treasury's
core policy scenario involves up to 50 per cent of all carbon permits, with
some restrictions, being sourced internationally up to 2020, when the
prescribed amount will be reviewed by the Climate Change Authority.[2]
These permits will be sourced from 'credible international carbon markets'.[3]
The committee thinks the concept of 'credible' markets is an important issue to
clarify.
3.4
In a public hearing held by the Joint Select Committee on Australia's
Clean Energy Future Legislation, the Secretary of the Department of Climate
Change and Energy Efficiency listed the schemes which he envisaged Australia's
ETS linking with at the beginning of the flexible price period. They were the European
Union Emissions Trading Scheme (EU ETS), the Kyoto Protocol's Clean Development
Mechanism (CDM), and the New Zealand ETS.[4]
As will be discussed, there are serious issues with the first two of these
'credible' schemes.
3.5
There are also many questions surrounding the credibility and the stability
of the international market for carbon units. The Australian ETS could be
significantly undermined by several international forces:
- market instability and immaturity;
- EU ETS dominance;
- structural flaws with the EU ETS;
- uncertainty of ETS establishment in many countries;
- uncertainty over what constitutes a carbon permit; and
- 'carbon criminals'.
3.6
These critical issues are explored below.
Market instability and immaturity
3.7
Several carbon markets have suffered instability, with European and
North American experiences offering stark examples. Such instability will
impact the Australian ETS as up to 50 per cent of carbon permits will be
sourced from foreign ETSs.
3.8
The European experience so far with one particular type of carbon unit,
the Certified Emission Reduction credit (CER), is of great concern to the
committee. A CER is a specific project-based carbon credit, and is one of
several carbon units issued under the CDM.[5]
The CDM allows companies to off-set their emissions, by surrendering the CER
credit instead of a carbon permit:
Large emitters in developed countries can finance individual
projects to reduce greenhouse gas emissions in developing countries if this is
cheaper than reducing their own emissions.[6]
3.9
In 2010, the market size of primary CERs fell by 46 per cent,
representing a loss in value of nearly US$1.5 billion. Furthermore, the market
has declined persistently: down 59 per cent in 2009 and down 12 per cent in
2008. Today, primary CERs account for less than 1 per cent of the global carbon
market. In 2005 primary CERs comprised 23 per cent of the global market; in
2006, 19 per cent.[7]
As is discussed later in this chapter, EU ETS permits comprise 84 per cent of current
global carbon trading; with the inclusion of CDM units, the proportion of the global
carbon market driven by the EU ETS increases to 97 per cent, as the EU ETS is
where most CERs are used.[8]
3.10
As noted by the Energy Supply Association of Australia (ESAA), there has
already been price instability within carbon trading markets between different
types of carbon units.[9]
ESAA makes a further point that not only will this price instability continue,
but that the number of forces creating instability will increase, as national
and multilateral institutions make country-specific decisions which cannot be
anticipated.
3.11
The committee is disturbed by how quickly a previously-significant
source of carbon units can be devalued, and is further concerned by what the
implications are for an Australian ETS where up to 50 per cent of carbon units
could be sourced from overseas markets suffering from such instability.
3.12
Opening in October 2003, the North American focussed Chicago Climate
Exchange (CCX) traded in carbon units called Carbon Financial Instruments
(CFIs), with the CCX's membership comprised of corporations as well as
jurisdictions:
Chicago Climate Exchange (CCX) was established in 2003 as a
voluntary greenhouse gas emission reduction program. Market participants
included major corporations, utilities and financial institutions with
activities in all 50 United States, 8 Canadian provinces and 16 countries. The
total program baseline covered 700 million metric tons of carbon dioxide (CO2)
- equal to roughly one-third the size of Europe's cap and trade program.[10]
3.13
Soon after opening, the CCX experienced considerable expansion. As discussed
in the World Bank's June 2011 report:
As new regional initiatives began to take shape in the U.S.,
membership of the CCX grew from 127 members in January 2006 to 237 members by
the end of the year while new participants expressed their interest in
familiarizing themselves with emissions trading.[11]
3.14
Despite this interest, the CCX's CFI price dropped from a mid-2008 high
of US$7.50 to a low of just US$0.05 in November 2010.[12]
After trading for seven years, in late 2010 the CCX closed.[13]
As discussed later in this chapter, three other ETS schemes in North America look
likely to either collapse or be ineffectual.
3.15
The committee believes that ETS participation or intention to
participate is, by itself, not sufficient to sustain a market approach to
abatement. The committee recognises the aspirations which many countries have
stated they wish to make to emissions reduction. In a submission provided to
this committee, it was noted that:
As of mid March 2010, 108 countries, covering 81.6 per cent
of world emissions, have pledged or aspired to cuts that will mean emissions
will peak before 2020.[14]
3.16
However, a 2011 survey by the World Bank's Carbon Finance Unit found approximately
75 per cent of respondents were pessimistic 'that a binding international
agreement could be achieved in the short term' when asked about the likely
success of an international agreement when the current commitment period of the
Kyoto Protocol expires on 31 December 2012.[15]
3.17
The effects of this uncertainty are serious; persisting doubts over what
international agreements will exist after 2012 'have left Europe alone to
absorb the supply of project-based CERs in the post-2012 environment'.[16]
3.18
The United Kingdom's House of Commons Environmental Audit Committee has
also recently expressed concern about internationally-sourced carbon permits:
Allowing the use of international offset credits in that
second budget period [2013 – 2017] would make achievement of subsequent carbon
budgets more difficult because it could reduce pressure to secure domestic
action.[17]
3.19
The UK Government's second carbon budget period runs from 2013 to 2017.
It is during this period that Australia's ETS would commence (July 2015).
3.20
The UK's Department of Energy and Climate Change (DECC) has noted weaknesses
with an ETS:
...it is worth noting that ETSs are one policy tool among
others, and that in some specific national contexts, they might not be a
suitable mitigation policy. Although the UK remains committed to market-based
instruments globally as a cost-effective tool that can help increase global
ambition, market-based instruments are only a mean to an end. ETSs are not a
silver bullet; they will have to be implemented in combination with other
policy tools (e.g. policy tools that directly impact behavioural change and
promote investments in new low carbon technologies).[18]
3.21
As the DECC states, an ETS is just one element of a greenhouse gas
reduction program, and it only works if other elements are also introduced. If
further policies to augment their ETSs are not introduced by other countries,
the rationale underpinning a global ETS is weakened.
Dominance of the EU ETS
3.22
The current value of EU ETS allowances is estimated at around US$120 billion
(currently about €85
billion, or about AU$112 billion).[19]
The EU emits between 12 and 14 per cent of global emissions.[20]
The EU ETS currently applies to 'about 45 per cent of the energy-related CO2
emissions of the region', only including some sectors of industry.[21]
The committee received evidence in this inquiry that an internationally-linked
Australian ETS would allow Australian businesses to 'access lowest cost
abatement through global carbon markets over the longer-term' from other ETSs,
such as the EU ETS.[22]
3.23
The proportional dominance that the EU ETS has in global carbon trading
is concerning. Allowances under the EU ETS account for 84 per cent of all
carbon trading in the world.[23]
When including the CDMs discussed earlier, this EU ETS dominance increases to
97 per cent.[24]
With the closure of the Chicago Carbon Exchange in 2010, delays in other
schemes, and the lack of progress elsewhere, this EU ETS dominance appears
entrenched.
3.24
Furthermore, the environmental impact of the EU ETS is potentially very
low. An August 2010 report estimated that the EU ETS (operating since 2005)
will reduce emissions by 0.3 per cent by 2012, relative to 1990 levels.[25]
The World Bank has stated that during 2010 and 2011, the EU ETS 'continued to
be plagued by market irregularities' requiring successive regulatory
interventions.[26]
Structural flaws with the EU ETS
3.25
Several recent incidents in the EU ETS have concerned this committee.
3.26
In March 2010 it was discovered that Hungary had been re-selling CERs already
submitted by companies to meet their emissions targets. The European Commission
quickly made regulatory amendments in order to prevent 'CER recycling' from
happening again.[27]
3.27
In mid-2010, Bulgaria had its Kyoto Protocol carbon trading rights
suspended by the UN Climate Change Secretariat, which administers the Kyoto
Protocol.[28]
The suspension followed a finding that Bulgaria violated UNFCCC reporting rules
regarding its 2009 annual report to the UNFCCC. In an audit, the secretariat
found that 'the individual review report contains a question which triggers the
compliance mechanism of the Protocol'.[29]
This suggests to the committee that the Climate Change Secretariat considered
the Bulgarian annual report to be unreliable.
3.28
Incidents such as these in Hungary and Bulgaria could affect an
Australian ETS. As noted in 2007 by the UK Parliament's Joint Committee on the
Draft Climate Change Bill, the standards of country B's ETS matter if it is linked
to country A's ETS:
Any linking of different schemes needs to be carefully
planned and monitored... This is because one of the two main virtues of a
trading scheme – that it provides “certainty about the level of carbon dioxide
emissions that will be achieved as the outcome is fixed and mechanisms are in
place to avoid the outcome not being achieved” – can become compromised if it
accepts credits generated from another scheme which has a more relaxed (or
non-existent) cap, or less robust auditing procedures.[30]
3.29
Discussing the EU ETS in 2007, the UK Parliament's Joint Committee on
the Draft Climate Change Bill expressed concern that national governments in
the EU had over-allocated carbon permits above their national emissions in
Phase I of the EU ETS (2005 – 2007). This surplus of permits meant that UK
efforts to reduce emissions had been undermined by the structural deficiency of
the EU ETS:
Thus it appears that, rather than funding emissions
reductions elsewhere, the UK’s purchase of [EU] ETS credits has merely bought
what has been described as “hot air” – a notional saving that does not actually
represent any reduction in global emissions.[31]
3.30
The impact of this over-allocation persists today. The over-allocation
of permits was discussed in a submission to this inquiry, which stated that 'one
report suggest that there is currently a surplus of 1.4 billion permits – or 3
years of supply' in the EU ETS.[32]
In another submission to this inquiry, it was noted that over-allocation
subverts the international carbon market:
...global carbon trading at the international level is
vulnerable to ‘hot air’ type situations in which excess permits...can corrupt
the entire system.[33]
3.31
In a September 2011 report, the UK Parliament's House of Commons'
Environmental Audit Committee noted that over-allocation had allowed companies
to accumulate hundreds of millions of permits worth billions of Euros, negating
any incentive to reduce their emissions.[34]
3.32
Phase II of the EU ETS (2008 – 2012) also has serious structural
deficiencies, albeit of a different nature. This flaw surrounds the use of
permits issued under the Kyoto Protocol being used in the EU ETS (and indeed,
any emissions reduction scheme):
One issue here is that CDM [Clean Development Mechanism]
credits are issued [in Phase II] against emissions saving projects in
developing countries which do not themselves have binding emissions caps under
Kyoto; thus one cannot be certain as to their overall contribution to reducing
global emissions.[35]
3.33
As heard by the UK Parliament's Joint Committee on the Draft Climate
Change Bill, these CDM credits are also potentially bogus:
...the economic incentives offered by the CDM appear actually
to be encouraging the building of refrigerant plants in the developing world,
simply in order that the HFC [hydrofluorocarbons] by-products from the plant
can be incinerated, and the credits generated from this sold at a large profit.[36]
3.34
Contrasting these details with comments from the secretary to the
Department of Climate Change and Energy Efficiency that he envisaged the
Australian ETS linking up with the CDM and the EU ETS because they are
'credible' schemes, the committee regards the reliance of the Australian ETS on
the CDM and the EU ETS as yet another flaw in the government's policy.
3.35
The committee notes that it is not alone in this view. Both the UK
Parliament's Committee on Climate Change, and the House of Commons'
Environmental Audit Committee recommended to the UK Government that
international permits not be used.[37]
Phase III of the EU ETS will give 164 industry sectors up to 100 per cent of
their permits for free. This includes more than 80 per cent of companies
covered by the EU ETS.
Uncertainty of ETS establishment in many countries
3.36
In May 2011, a Productivity Commission report noted that both Japan and
South Korea had delayed implementing previously-announced ETSs.[38]
3.37
In a submission from the Minerals Council of Australia, it was noted
that in December 2010 the Japanese government had withdrawn the draft national ETS
legislation from the parliament, postponing it to at least 2013.[39]
The Association of Mining and Exploration Companies also noted Japan has
postponed its plans for carbon pricing.[40]
Japan is the world's fifth largest emitter of greenhouse gases.[41]
3.38
Similarly, South Korea delayed the introduction of a national ETS. Due
to start in 2013, the scheme would have applied to 60 per cent of national
emissions.[42]
As discussed at a public hearing, despite the South Korean government offering
to provide 90 per cent of permits free, South Korean industry rejected this
offer and the introduction of the national scheme has been postponed until at
least 2015.[43]
3.39
As already discussed in this chapter, the Chicago Climate Exchange
closed in late 2010. However, in the North American region, three other
emissions trading schemes have recently experienced significant difficulty.
3.40
The Western Climate Initiative (WCI) is comprised of four Canadian
provinces (British Columbia, Manitoba, Ontario and Québec), and seven states in
the United States of America (Arizona, California, Montana, New Mexico, Oregon,
Utah and Washington). As well as these 11 participating jurisdictions, there
are sixteen observer jurisdictions in Canada, the USA and Mexico.[44]
3.41
Yet the WCI is unstable. The Productivity Commission notes that the
intention of the WCI is to 'reduce emissions to 15 per cent below 2005 levels
by 2020'.[45]
Despite this intention, the Productivity Commission noted two emerging but
significant flaws: firstly, that 'only California is fully committed to implementing
an ETS by 2012' and secondly, that there will be no price and abatement
improvement in emissions for 2012 due to recommendations made by the WCI
itself. Furthermore, four participating jurisdictions have withdrawn or stated
their intention to withdraw from the scheme.[46]
3.42
Similarly, on the other side of the North American continent, the
Regional Greenhouse Gas Initiative (RGGI) scheme is unstable. The RGGI is
comprised of ten north-eastern states in the United States of America
(Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New
Jersey, New York, Rhode Island and Vermont).[47]
Pennsylvania has observer status, as do the three Canadian provinces of Québec,
New Brunswick, and Ontario.[48]
3.43
Yet once again, and despite all the interest, the market experienced
significant difficulties. The RGGI carbon price has bottomed-out at US$1.89,
which was the scheme's floor-price.[49]
Furthermore, several jurisdictions are either unclear about their commitment or
have announced intention to withdraw.[50]
In May 2011 the Governor of New Jersey announced the state's plans to withdraw
from the RGGI by the end of 2011.[51]
New Hampshire also appears likely to withdraw.[52]
3.44
When operational, the Midwestern Greenhouse Gas Reduction Accord (MGGRA)
was comprised of six states in the United States of America (Illinois, Iowa,
Kansas, Michigan, Minnesota and Wisconsin) and the Canadian province of
Manitoba.[53]
Three other states in the United States of America and a Canadian province have
observer status. In the beginning of 2011, it was reported that the governors
of several MGGRA jurisdictions announced they would not pursue the
cap-and-trade dimension of the scheme.[54]
The MGGRA website was closed in January 2011, and the World Bank notes that
'MGGRA appears no longer functional with cap-and-trade off the agenda'.[55]
3.45
It is clear to the committee from these recent events that the appetite
of many jurisdictions for pursuing the ETS platform is diminishing.
Uncertainty over what constitutes a carbon permit
3.46
The UNFCCC is currently reviewing methodologies for several elements of
the CDM.[56]
The World Bank has noted the increasing unsuitability of the CDM scheme to
lowering global emissions:
...the CDM is simply not designed to drive the structural
transformation of industry in developing countries that the transition to a
low-carbon economy requires. By definition, offset mechanisms such as the CDM
cannot reduce global emissions in net terms.[57]
3.47
Under Phase II of the EU ETS (2008 – 2012) EU member states in the EU ETS
permitted (on average) 13.8 per cent of emissions permits to come from the CDM.[58]
However, the EU ETS will restrict the use of CDM permits under Phase III (2013
– 2020).[59]
It is unclear to the committee what proportion of the EU ETS will be filled by
the CDM in Phase III.
3.48
The committee has noted the lack of clarity around the international
regulatory regime for the CDM from 2013 onwards, after the conclusion on 31
December 2012 of both Phase II of the EU ETS, and the current commitment period
of the Kyoto Protocol.[60]
3.49
Given the importance of the CDM to the EU ETS, the outcome of the UNFCCC
review process, the transition to Phase III of the EU ETS and the next
commitment period of the Kyoto Protocol, these events may significantly impact
on the price of EU emissions permits. Tellingly, the World Bank noted forecasts
which predict that prices for a particular type of CDM permit (the CER
discussed earlier in this chapter) will continue to decline in Phase III.[61]
3.50
As well as the two UK Parliamentary reports discussed earlier, the
National Institute of Economic and Industry Research (NIEIR) also noted that
CDM permits which are imported into developed countries may well undermine
emissions abatement.[62]
As well as providing its own macroeconomic arguments against importing carbon
permits, NIEIR also referenced the UK Parliament's Committee on Climate Change
report from October 2009, which recommended that the UK scheme not allow import
permits (such as the CERs in the CDM) because of their potential to delay
domestic emissions reductions because cheap import credits (such as CERs) can
be used to maintain the financial viability of high emitters.[63]
This would make future emissions targets unrealistic, and make future
reductions more expensive.
3.51
This is further exacerbated by the lack of certainty which has plagued
the CDM since its inception.[64]
The current state of play, as noted by NIEIR, is that the CDM 'was not extended
at the Copenhagen conference, and also that it is unlikely to be included in
the approved programs of pro-abatement countries'.[65]
3.52
How this will affect the global situation is unclear, which only adds to
the uncertainty surrounding the Australian Government's Clean Energy Future scheme.
'Carbon Criminals'
3.53
The EU ETS scheme has suffered repeated cyber-criminal attacks. This
vulnerability persists, despite concerted efforts by the European Commission
and EU member states.
3.54
In mid-January 2011, it was discovered that €45 million worth (about AU$60 million[66]
at the time) of EU Emission Allowance Units (EUA) had been stolen from the
national registries of five EU countries. As a result, EU spot trade was
suspended.[67]
3.55
In November 2010, cyber-criminals accessed EU ETS registry accounts in
Romania, stealing 1.6 million EUAs.[68]
These EUAs were worth €15
million, and belonged to a cement maker, Holcim.[69]
In May 2011, 72 per cent of the nearly 400,000 suspected EUAs which had been
submitted to the EU ETS for 22 emission sites to cover their 2010 emissions
were identified as having been stolen from Holcim.[70]
3.56
After being stolen, the Holcim EUAs had been blacklisted. However, this
did not stop the cyber-criminals from selling the EUAs; nor did it protect
companies from buying these EUAs in good faith. Six utilities and an
infrastructure provider fell for this scam, buying the stolen permits and
submitting them to the EU ETS.[71]
3.57
Also in November 2010, the German EU ETS registry was closed after being
infected with a 'Trojan' computer virus called 'Nimkey'.[72]
3.58
In early 2010, a phishing scam led to several EU ETS registries being
temporarily closed after millions of Euros worth of carbon units were stolen.[73]
This crime occurred despite the EU revising its internet security guidelines in
January 2009 due to widespread phishing attacks on users of EU ETS registries
in 2008 and 2009.[74]
3.59
According to the European law enforcement agency, Europol, European
taxpayers lost €5 billion
(between AU$8 billion and AU$10 billion during that period) to EU ETS "carousel"
fraud in just 18 months up to December 2009, out of a total EU ETS worth around
€90 billion at the
time.[75]
Several European countries were targeted, among them the Netherlands, the United
Kingdom, France, Denmark and Belgium.
3.60
The carousel scam involves criminals buying carbon units in EU countries
without a Value Added Tax (VAT), importing and then selling the units in an EU
country with a VAT added to the price of the carbon unit, but then pocketing
the VAT instead of paying it to the relevant taxation authority.[76]
It is termed a 'carousel' fraud because the commodity goes round and round.
Initially, criminals import a carbon unit from a country without a VAT into a
country with a VAT. Next, they repeatedly on-sell the unit through a series of
conspirator companies. At each sale the price of the carbon unit increases;
these increases also increase the absolute value of the VAT. In the final
stage, the final company in the chain of the carousal fraud reclaims the final
(vastly inflated) VAT amount from the government, and then disappears before
the fraud is discovered. The scam occurs rapidly, is difficult to prove, and
taxpayers foot the bill, because the VAT reimbursement comes from government
coffers.
3.61
In the first half of 2009, French authorities suspected carousel fraud
was occurring in the French carbon trading exchange, BlueNext, which
experienced a surge in trading of 'average daily volumes of 9.4 million in May,
up from less than 7 million in the first four months of the year'.[77]
As a consequence, carbon permits were made VAT-exempt in France. The fraud was
estimated at more than €150
million (about AU$270 million at the time).[78]
3.62
In September 2009, the European Commission announced an overhaul to its
VAT system to counter carousel fraud.[79]
Several EU member states subsequently changed their national tax laws in 2009,
with carbon trading volumes dropping by up to 90 per cent.[80]
Despite Europol's warning and some EU members amending their tax laws, 12
months later, in December 2010, criminals were still using this scam,
attempting to net €500
million in Italy alone (about AU$670 million at the time).[81]
3.63
In an Australian context, the complexity of building a capability to
monitor criminality and to integrate this capability into an already complex ETS
model is fraught, and is an invitation to carbon criminals. It also means that
agencies other than the Clean Energy Regulator and the Climate Change
Authority, such as the Attorney General's Department, the Australian Crime
Commission, Crimtrac, Austrac, the Australian Tax Office, the Australian
Federal Police, the Australian Securities and Investments Commission, the
Australian Prudential Regulation Authority, and a myriad of other federal and
state agencies, will need to be involved in surveillance of the market and
pursuing criminals. The committee is concerned that these agencies will not be
adequately and practically resourced ahead of the launch of the flawed scheme,
despite the Joint Committee's noting the provisions in the bills for
cooperation between the Clean Energy Regulator and some of these agencies
mentioned above.[82]
3.64
Furthermore, the committee is concerned by the potential cumulative
effects of such fraud, were it to happen here. As discussed earlier, Europol
quantified EU ETS carousel frauds as netting criminals €5 billion in only 18 months to December 2009.
This is in a scheme which raises approximately €500
million a year in revenue.[83]
The Australian Government estimates that Australian carbon permit revenues will
be around $9 billion a year in the last year before the ETS (2014 – 2015).[84]
When the fixed price period transitions to the flexible price period, the
potential windfall for criminals is significant.
3.65
The committee is concerned that such a rushed policy could result in
huge losses to the Australian taxpayer in the initial years of the scheme. If
losses here are comparable to international experiences, over the first few
years of the scheme criminals could net hundreds of millions of dollars from
the Australian taxpayer.
3.66
For this reason, the committee is concerned that the government's plans
do not involve the sufficient resourcing and training of all the agencies
mentioned above to deal with the complex frauds used by carbon criminals. The
committee regards these capabilities as likely being required from the very first
day of the Australian ETS, so that agencies can successfully anticipate and
prevent the Australian taxpayer and Australian businesses from being defrauded.
Committee comment
3.67
As discussed in this chapter, many emissions reduction schemes around
the world have stumbled or fallen. This increases the risks to Australia for
relying on internationally-sourced permits, given the failings or failures of
these schemes.
3.68
An Australian ETS which relies on internationally-sourced carbon permits
will be exposed to destabilising forces over which the Australian Government
has little, if any, control.
3.69
Carbon permit price instability and plummeting values, questionable
conduct by foreign carbon permit registries, deeply-flawed types of carbon
credits, global market uncertainty, carbon criminals and regulatory overstretch
all threaten Australian businesses. The scale of the Australian ETS means these
forces also threaten the financial security of the Australian people.
3.70
Many governments around the world are all too familiar with poorly
planned policies and fatally flawed schemes. It is the view of this committee
that the Australian Government should not be so bent on joining their ranks.
Recommendation 3
The committee recommends that if the government proceeds
with its carbon tax, that the relevant regulator be sufficiently resourced to
minimise the risk of fraud or other undesirable activities that might undermine
the integrity of the Australian carbon permits
Recommendation 4
The committee recommends that the government carefully
consider the risks and benefits from linking to foreign carbon markets and that
comprehensive safeguards be put in place to minimise the risk to Australian
purchasers of foreign carbon abatement units.
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