Australia and New Zealand leaders agreed Monday to investigate linking the near neighbors’ greenhouse gas emissions trading schemes in the future as a means of reducing global emissions and bringing their economies closer.
New Zealand recently introduced a national scheme in which polluters trade permits allowing them to emit carbon dioxide and other gases, while Australia’s plan to introduce a similar scheme is bogged down in a bitter political row.
Australia plans to introduce a tax on carbon gases starting July next year. The tax would be converted into a trading scheme within five years in which the price for a permit to emit a ton of carbon dioxide will be set by free market forces rather than the government.
Australian Prime Minister Julia Gillard and her New Zealand counterpart, John Key, agreed to appoint officials to investigate linking the schemes so that carbon permits could be traded between the two countries.
“It arguably does make sense for there to be interoperability and to be able to trade emissions across the Tasman” Sea, Key told reporters at Australia’s Parliament House.
“My view as New Zealand prime minister has always been I wouldn’t want to see an investment decision moving across the Tasman one way or the other based on climate change policy,” he said. “It would seem to defeat what is a global problem.”
New Zealand’s scheme began in 2008 but didn’t start taxing polluters until last year. The government has initially imposed a fixed price of about $10 per metric ton ($11 per ton) of carbon emissions, but that will move to a market-based system by next year.
Key estimates the scheme costs average New Zealanders about $120 per year through the higher prices they pay for driving their cars or heating their homes.
Gillard will soon announce the tax rate Australia will set on a ton of carbon dioxide. The Australian tax is already proving unpopular in opinion polls and could cost Gillard’s center-left Labor Party government at elections due by 2013. The conservative opposition has vowed to repeal the tax if they win office.
Gillard described the New Zealand system as a success.
“Australians would be asking themselves if the kiwis have had the guts to price carbon, why can’t we?” she said, using a slang term for New Zealanders.
“New Zealand is in front, we will catch up, we’ll show the same determination they have and we’ll have officials working together on linking the two schemes,” she added.
Australia is one of the world’s worst greenhouse gas emitters per capita due to its heavy reliance on abundant reserves of cheap coal for electricity generation. Most of New Zealand’s emissions come from methane belched by livestock, with sheep outnumbering humans almost 10 to one.
The two countries are free trade partners with close economic and social links.
