Australia to Rely on Overseas Emissions Credits, Review Says

By Angela Macdonald-Smith

Oct. 29 (Bloomberg) -- The Australian government is seeking to cut the economic cost of reducing greenhouse gas emissions by buying as much as 25 percent of its carbon allowances overseas by the end of 2020, the Australian Financial Review said.

The Treasury department is assuming Australia will meet an increasing proportion of its carbon commitments by purchasing credits from developing countries where the cost of reducing greenhouse pollution is lower, the newspaper reported, citing the Treasury's economic modeling for emissions trading, obtained ahead of its release this week.

The modeling assumes that, depending on the emissions reductions targets that are set, between 10 percent and 25 percent of Australia's emissions allocations will be met by overseas purchases, the Review said. Purchasing of overseas credits won't plateau until the mid-2030s, when it is assumed carbon capture and storage technologies will reduce greenhouse pollution from coal-fired generators, it said.

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