Australian Carbon Emissions Permit Price Rises in Latest Trade

By Angela Macdonald-Smith

Aug. 8 (Bloomberg) -- Australia's latest trade in carbon emissions drew a higher price than earlier transactions, said broker Newedge Australia Pty, as the government invites comment on plans to start a national system in 2010.

The over-the-counter sale of 20,000 metric tons of carbon dioxide in the so-called Calendar 11 contract for settlement Feb. 1, 2012, was priced at A$21.50 ($19.32) a ton, said Gary Cox, Sydney-based manager of environmental derivatives at the Australian unit of Newedge Group. Earlier transactions have been priced as low as A$18.

The latest price in Australia is still less than half the price of 26.15 euros ($39.92) for a similar contract in the European Union market on London's European Climate Exchange. The EU system, the world's biggest greenhouse gas market, has been operating since 2005. Trading in Australia started in May, with a transaction between AGL Energy Ltd., Australia's biggest electricity and gas retailer, and Westpac Banking Corp.

``I have a feeling this price is now getting a little bit towards the top'' given the government's indications it will have a ``nice, steady, easy-rolling start'' to emissions trading, Cox said by telephone. The government may set a cap for prices in the first five years of the system that may be ``not that much further away from the current price levels,'' he said.

About 12 over-the counter trades have taken place so far in Australia, either directly between parties or through brokers, all in the Calendar 11 contract, Cox said. The Calendar 12 contract is being offered at A$23.50 and bid at A$20, he said.

Climate Change

Australia's carbon market could be worth as much as A$11 billion a year within the first few years of operations, Oslo- based researcher Point Carbon said last month.

Climate Change Minister Penny Wong released a discussion paper on the government's carbon trading plans last month. The government has started consulting industry about the design of the system.

The Treasury department will release economic modeling in October, followed by a White Paper at the end of 2008 that will include medium-term emission-reduction targets. Legislation is due to be introduced in the third quarter of 2009.

The government has a long-term goal of cutting greenhouse gas emissions 60 percent from 2000 levels by 2050.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net