A couple of simple observations suggest the EU ETS is not all it's cracked up to be
1) an audit of carbon credits claimed under the Clean Development Mechanism (notable beneficiary China) found that 40% failed to meet even the slapdash criteria. In other words they weren't really emissions cuts so they had the perverse effect of exonerating actual emissions in Europe.
2) last week the Germans opened a huge (2.2 GW) brown coal fired power station at Neurath. The EU ETS was supposed to put the kibosh on all new coal power in Europe.

Seeing as how China accounts for nearly a third of global emissions I'd like to know when they will be regarded a 'developed' country under Kyoto rules. I suspect the Europeans like the endless supply of cheap carbon credits.

Carbon price - Do we really want EU to dictate our economic future?

Is it in Australia’s long term interests to hand to EU the ability to dictate our carbon price? Doing so gives EU enormous power to do what suits them, no matter how much it may damage Australia.

EU introduced their ETS to gain an economic advantage over USA. USA didn’t fall into the trap. Since then, EU has continually tampered with its ETS for its own political purposes and economic advantage. They will do so again.

Is it wise for Australia to subjugate itself to rules made in Brussels?

All negative from the Tasweigan. I don't think there will be much difference between the floor price and the trading price, could even be more for carbon credits than the floor price. Around $ 10__12 / ton. Subject to rise and fall. Seeing AU floor price was not to start for 3 years, and providing Europe comes out of recession. The trading price could be even more. This proposal is in line with company wishes.

Unless the government has changed the rules regarding the percentage of carbon credits that may be purchased from overseas, they will be limited to 50% for each company affected by the new charges.

I have previously expressed my concern that the outflow of money from Australia in order to pay for these pieces of paper will be a strain on our balance sheet. If the EU's carbon credits are cheap, then at least this undesirable aspect of the new tax regime will be slightly reduced, but what a mess this must be for corporations which are trying to establish business plans reaching well into the future - say, 10 or 15 years. With a government that appears to be willing to change the rules weekly and an Opposition that has no policies except to promise to reverse everything, I'm surprised that the BCA and other bodies representing business have not made their frustrations more public.

Presumably, they have decided to operate behind closed doors and may even have sought this latest change, but they have been strangely mute in public.

579 says:

"I don't think there will be much difference between the floor price and the trading price,"

Gee, every other market based carbon trading scheme in the world says the opposite; who to believe; my own eyes or you? The usual argument by AGW alarmists: don't believe what has happened and the ongoing evidence, believe what I say.

579; why don't you tell us what happened in Chicago with carbon trading?

Pollutants are a world problem so it needs to be a world wide trading scheme, as business wants. The more business moves to more cleaner strategies the less the longer term liability. The more cleaner business becomes the less credits they will need to keep, and maintain.
The against everything party, will no doubt go against anything to make the world a better place.

Anthony is quite right to say that market-based carbon schemes have basically proved a waste of time. The require far more politcal will than most governments are willing to give to them, and have proved highly unstable in practice.

I will take issue on two points, however:
1) Anthony I thought the Californian scheme was going ahead. I seem to recall reading that permits for it were being auctioned this month. I am prepared to be corrected. It is, of course, the only scheme even remotely comparable to the Australian carbon tax.

2) I don't really agree that the EU carbon price is dictated by Brussells. Gorvernment issuing of free permits and reduced emissions due to the crisis means that prices have been heading down for some time. This is not expected to change. But I think Brussells would like to see a higher carbon price.

Tying ourselves in any economic way to the failed EU is patently a major mistake? The European carbon trading scheme is a Clayton's scheme, or the carbon trading scheme you have when you're not having a carbon trading scheme.
If anyone understands how this scheme will reduce emission or actually do more than simply line the pockets of carbon broking business barons; and or, create an even bigger bureaucracy; then, in the now famous words of Pauline Hanson, "please explain"?
If we have to put a price on carbon then let it remain a simple tax or better yet, integral to long overdue tax reform and quite massive simplification!
Combet clearly has always wanted an ETS? He, in my view, has been seduced by the investment billions waiting in the wings; and or, his post politics prospects?
When he addresses this subject, he invariably licks dry lips and or, heads for the glass of water?
Linking us to the EU scheme has turned what should have been a very straightforward and transparent tax, into a dogs breakfast of a scheme; or vastly increased complexity?
A very wise man once remarked, "that at some point, complexity always becomes fraud"
Fortunately, this fatuous foible, has added to the surety that Labour, will be bundled out of office at the next federal election?
And maybe just maybe, Abbott has the testicular fortitude to follow through, with his threatened double dissolution, that loosens the tail wagging the dog, minor parties' hold on the reins of power!
And then having control in both houses, reintroducing a re-badged work choices, so he also can follow Howard into political obscurity?
Let's hope that there's intelligent life somewhere in the universe, cause there seems to be bugger all down here on planet earth, or in any of her parliaments?
Rhrosty.

Curmudgeon; the California law case involving a challenge to their cap and trade, ETS, legislation is, as far as I can tell, unresolved, and so represents an ongoing obstacle to carbon trading in that state. I am willing to look at contrary evidence about that. The last I saw, in any event, the cap and trade scheme will have 90% of its issued credits for free in the first few years of the scheme's operation:

http://www.theaustralian.com.au/news/world/us-state-of-california-adopts-an-emissions-trading-scheme/story-e6frg6so-1226172986886

I don't know about you but if a government scheme based on a tax equivalent has that tax set at zero then that is not a tax and, in the case of the Californian scheme, not an ETS.

As to Brussells not being in the driver's seat for price setting of the EU carbon trading scheme, I would respectfully disagree on the basis that Brussells sets the number of carbon credits via NAP and, as the link shows, can by doing so have a major impact on the price for a carbon credit up or down. I mean they've admitted that they want to control the price of the trading, so unless they are liars I don't see how any other conclusion can be reached.

More generally I think it is beyond doubt that when carbon trading is exposed to a market it collapses. People are not completely stupid!

Curmudgeon, I beg your pardon; I have done some more research and found that while the challenge by Green groups to California's cap and trade/ETS scheme is still on foot the court would not allow a stay on the scheme while the legal challenge continued.

I still maintain the points about the Clayton's nature of the California scheme and that the EU scheme is not a market based one.

Good article, well said. Carbon Taxes were originally designed to be income streams for the UN, EU, Carbon Exchanges, alternative energy companies and various other hangers on without the interference of the market. It is basically a tax to fund green activism in the UN and EU and deprive the West of some of its economic prosperity while benefitting some wealthy elite in the process (Al Gore etc). The environmental benefit is nowhere to be seen and was simply the vehicle to introduce such a Tax.

Taking the scheme out of the marketplace is an acknowledgement that trading in CO2 is worth virtually zilch in reality. Our money and so many hands in the till waiting for their share of it. A shameful exercise but a warning to the population of how organisations such as the UN are populated by a coalition of self serving bureaucrats and green activists who have formed a toxic but influential mix, sufficient to bend Governments to their will.

Cohenite

All fair enough although we must disagree on Brussells (like saying "we'll always have Paris") I don't doubt what you say on the substance of the California scheme, which I had not looked at properly.. what a waste of time.. okay, tnks for that..

I do believe that Brussels, having the the power to controll the distribution of credits throught the NAP, whilst not influencing the direct trade in credits, has enormous influence over the market.

I would not be the least bit surprised if, over the next twelve months, a directive is not given that removes a huge amount of the over allocated existing paper.

Atman, your description of the UN as organisation "populated by a coalition of self serving bureaucrats and green activists who have formed a toxic but influential mix" is frighteningly accurate.

579 is correct when he observes that "pollutants are a world problem", it is just that co2 is not a pollutant, rather, an airborne plant fertilizer.

Cohenite, I have been following the 'AB 32' legislation wrangle, but not sure where it is up to at this stage.

Another informative and interesting post Anthony.

Prompete, this is the latest on the AB 32, California's ETS legislation:

http://www.forbes.com/sites/justingerdes/2012/05/31/california-lawmakers-approve-cap-and-trade-revenue-bill/

Given that the litigation was initiated by Green groups who did not think the Californian ETS went far enough to reducing CO2 emissions, one could only guess as to what they make of legislation which enables carbon credit accumulation on the basis of this criteria:

"AB 1352 designates five broad categories as permissible expenditures for auction revenue: renewable energy and energy efficiency; low-carbon transportation and infrastructure; natural resource protection; research and development; and empowering local leadership climate change planning and implementation."

"Local leadership"?!

No wonder California is the economic dregs of the US.

cohenite:"No wonder California is the economic dregs of the US."

Economic dregs? Seriously? California by itself has the eighth largest economy in the world. It's the largest state economy in the US.

http://en.wikipedia.org/wiki/Economy_of_California

I've heard some pretty impressive butt crack whistlin' in my time, and this piece of fluff is about the fifth worst.

You know, there was a time when I believed that people like Bugsy & Co were men of science who had a genuine belief in AGW ...But that was when I was still a green horn to OLO.


<<California by itself has the eighth largest economy in the world. It's the largest state economy in the US>>

Ergo, it can’t be in the financial doldrums!

Seriously, Bugsy?

Well if I can drag you away from Wikipedia for a moment , you might like to have a geeza at some other sources.

“California is on the verge of an economic meltdown. The state, with the second highest foreclosure rate in the nation, is being hammered by the deep recession, rising unemployment and a growing multi-billion dollar budget deficit”
http://www.cnbc.com/id/31923599/

“(Reuters) - California's budget deficit will swell to nearly $7 billion greater than expected due to weak tax revenues and slow progress in cutting spending, Governor Jerry Brown said on Saturday.”
http://www.reuters.com/article/2012/05/13/us-california-deficit-idUSBRE84C00D20120513

The ETS is just another derivative conjured up by the financial system to rort us the consumer.It has nothing to do with moderating climate.

If CO2 is such problem why do not our Govts tax the oil and coal as it comes out of the ground or at the refinery stage? Answer, because then the large Corps will pay and their share prices/profits will fall.Fuel is pretty in-elastic and demand will not fall much.

They can pass some of this cost onto the consumer but with a tax on the end user ( CO2 tax) or an ETS we get to pay for it all. Can people be that stupid as not see through this scam?

Arjay you said "Can people be that stupid as not see through this scam?"

It is a brilliantly thought out scam with the backing of some prominent people. Thats a very difficult thing for the average person to question or resist.

Well said SPQR; Bugsy is like all pro-AGW believers, reduced to facile irrelevancies, untruths, moralising edicts and general assumptions of superiority and faux outrage.

California is a basket case because of green dreams:

http://www.newgeography.com/content/001712-the-golden-state%E2%80%99s-war-itself

California is also a template for the hypocrisy of the green dreaming; banning coal yet importing power from coal sources in other states:

http://www.pnm.com/systems/4c.htm

And did I mention it was a basket case in 2009:

http://www.usatoday.com/news/nation/2009-02-19-california-hurting_N.htm

And still is today as SPQR has shown but it is worth repeating:

http://www.cnbc.com/id/31923599/

8th largest economy in the world says Bugsy; without the Greens it would be the biggest. Perhaps Bugsy would like to tell us how the EU is travelling right now. If you want to stuff up an economy just go green.