Australia’s first carbon market dies, as a new one begins

The timing must have been deliberate. Thursday marked the official closure of the world’s first carbon market, the NSW Greenhouse Gas Abatement Scheme, on the very day that the first units in Australia’s new national carbon market were issued.

Thursday was the last day of compliance for the NGAS scheme, a market which had been all but moribund for many months. It was really just a ceremonial event – the units have been trading at 15c – the cost of that compliance. At their peak, they reached more than $14. The scheme, launched by then state Premier Bob Carr more than a decade ago, is credited with 140 million tonnes of emissions reductions.

Carr, now the federal foreign minister, did not attend the last rites at the offices of carbon broker NextGen on Thursday night, as he was in New York. But a bunch of people from IPART, which administered the scheme , and current and former participants were on hand to consume a few cocktails to mark the occasion.

But as one market ends, another begins. NextGen on Thursday announced it had completed the first carbon offset deal under the federal government’s carbon scheme, selling 10,000 units at $22 each.

And it came as the Clean Energy Regulator issued the first free carbon units mechanism – with a total of 6.3 million units going to alumina producer Alcoa, and ammonia and ammonium nitrate producer Queensland Nitrates under the industry assistance program designed to help those competing in export markets.

“The issuance of the units signals the start of a carbon market in Australia,” said Chloe Munro, the chair and CEO of the CER.

Meanwhile, the federal government has announced it will join the Climate and Clean Air Coalition – an alliance of over two dozen nations, intergovernmental organisations, the private sector, and civil society, which is committed to rapid action to reduce short-lived but highly potent pollution caused by methane, black carbon (soot), tropospheric ozone (smog) and hydrofluorocarbons.

“Australia is signing on with other nations, including the United States, who are supporting action to reduce these pollutants,”  Greg Combet, Minister for Climate Change and Energy Efficiency, said in a statement.

“Apart from trapping heat in the atmosphere, these pollutants can also be extremely damaging to human health, air quality, crop yields and ecosystems,” he said.

The coalition was launched last year. It believes that taking action quickly to reduce short-lived climate pollutants, which are more potent than carbon dioxide, has the potential to slow down warming by 2050 and would also increase the chance of staying within a global temperature rise of below 2 degrees Celsius.

It proposes fast action on diesel emissions including from heavy duty vehicles and engines;  upgrading brick kilns which are a significant source of black carbon emissions;  accelerating the reduction of methane emissions from landfills; speeding up cuts in methane and other emissions from the oil and gas industry; and  accelerating the take up of alternatives to hydrofluorocarbons.

“Innovative Australian businesses who are developing and deploying solutions domestically in response to our Clean Energy Future plan will have new growth opportunities as countries around the intensify their efforts on these issues”,  Combet said.