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Emissions trading coalitions: leveraging emissions trading to achieve greater levels of global mitigation ambition

14 March 2012

Australia could get more out of its carbon pricing scheme by focusing its emissions trading efforts on its neighbours rather than Europe.

Carbon markets are the forefront of domestic climate policy in Australia. They are now also becoming a core question of diplomacy, as Australia looks to link its emissions trading scheme to that of trading underway in the European Union (EU) and New Zealand. This is happening in parallel to the ongoing UN framework negotiations towards a new legal agreement covering all major emitters and as a growing number of countries and regions institute domestic emissions trading and set pollution targets.

This paper suggests that Australia – currently facing a choice on how it interacts with international carbon markets – has a unique opportunity to act strategically in our neighbourhood and boost domestic and international efforts to reduce emissions.

Linking Australia’s emissions trading scheme into those of New Zealand and the EU is important. However the real opportunity lays in building a regional emissions trading coalition that draws in developing countries and helps boost global ambition.