MARKET UPDATE: The End is the Beginning for Climate Policy?

With the carbon tax repeal set to progress, Clive Palmer’s alternate Emissions Trading Scheme (ETS) unlikely to commence until later in the decade – if at all – and the government’s Direct Action Plan remaining deeply unpopular, policy uncertainty continues to be the only bankable commodity for Australian market participants.

While industry continues to question how Australia will reach its commitment to cut greenhouse emissions by 5 per cent by 2020, claims that the Australian market will be left without any operating emissions reduction policy may be premature, with the Senate recently supporting the appropriation of funds for the Emissions Reduction Fund (ERF), and the political fate of the government’s Direct Action Plan still very much in play.

In this Market Update, we analyse the dynamics in the new Senate and the implications for the Carbon Farming Initiative Amendment Bill over the next fortnight, with the vacuum left by the repeal of the carbon tax, along with the successful passage of ERF appropriations, likely to provide the government with critical leverage as it seeks to implement its replacement emissions policy.