What is included in the linking arrangement between Australia and the European Commission
The arrangement includes the European Commission seeking a mandate to negotiate a treaty on behalf of the European Union by mid-2015 for the full linking of the emission trading systems from July 2018 (the Australian Government has an existing mandate to negotiate a treaty). As an interim arrangement, a partial link will be established to allow Australian businesses to buy and use European Union Emissions Allowances (European allowances) for compliance under the Australian scheme from July 2015, until the full link comes into effect no later than July 2018.
To facilitate these arrangements and simplify the path towards full linking arrangements, the Australian Government will not proceed with the implementation of its price floor and will limit the use of Kyoto Protocol eligible international units1 under the Australian scheme. In addition, Australia will set its price ceiling with reference to the expected 2015-16 price of European allowances.
1The Kyoto units are: Certified Emission Reductions (CERs) from the Clean Development Mechanism; Emission Reduction Units (ERUs) from the Joint Implementation Mechanism; and Removal Units (RMUs) from land use, land-use change and forestry activities undertaken in developed (Annex I) countries.