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EU announces plans to launch joint carbon trading

29 August 2012

European Union and Australia agreed to link their carbon trade schemes by 2018. This deal will allow Australian firms to buy cheaper EU carbon credits in a move expected to increase demand for EU carbon allowances.

As per the agreement, Australia will alter its scheme in order to link with the EU ETS. The scheme will no longer require a carbon floor price and will limit the number of Kyoto units of carbon that participants can use to 12.5 per cent of their liabilities.

By using the EU Allowances, Australia will be able to buy up to 50 percent of Australian liabilities from July 2015 but European companies will have to wait until 2018 to use Australian allowances.

EU and Australian plan to agree registry arrangements for the interim link by mid-2013. The Australian Government will enter into negotiations on a full-linking agreement, and the Commission said it will seek a mandate in the coming months.