Author: Nicola Durrant
Date: 01 October 2008
There appears to be a broad consensus that an emissions trading scheme is the best political response to climate change. But as Nicola Durrant points out, in this article, there is still much work to be done in establishing the legal foundations of such a scheme. Without such foundations, she argues, carbon trading will simply not work.
The innovative legal instrument of the tradeable emissions scheme, within a capped carbon trading system, promises to reduce greenhouse gas emissions and minimise the impacts of climate change in a swift and cost-effectively manner. The allure of this cost-effective approach to solving a global environmental problem led to the adoption of market mechanisms to assist in the reduction of global emissions under the Kyoto Protocol to the UN Framework Convention on Climate Change and, subsequently, the European Union Emissions Trading Scheme. This, in turn, acted as a catalyst for the Australian government's decision to rely almost entirely on the implementation of a carbon market to reduce Australia's greenhouse gas emissions through the proposed Carbon Pollution Reduction Scheme (the CPR Scheme).
However, the effectiveness of the proposed Australian trading scheme could be seriously undermined by the absence of adequate legal reform to ensure the optimal operation of the future carbon market. In order for the carbon market to achieve its core objective, and facilitate cost-effective emissions reductions, it is critical that the trading scheme is supported by an appropriate legal framework.
Such a framework must be designed to enable the effective implementation, administration and enforcement of a legally enforceable regime to reduce emissions. That legal framework must include, first and foremost, the adoption of an appropriate emissions reduction trajectory and associated targets for Australia and the imposition of a regulatory restriction on the emission of greenhouse gases to the atmosphere. The scheme must establish clear, transparent and consistent legal rules for participation in the carbon market, with minimal restrictions on trade, and an open flow of information to the market. There must also be rigorous monitoring and reporting procedures to enable instances of non-compliance to be identified and addressed through the imposition of both stringent penalties and provisions requiring liable entities to 'make good' on any shortfall in retired permits.
Full article at The Brisbane Line magazine.
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