While debate continues on the future of the Australian carbon tax, the Australian Climate Change Authority (CCA) will next month release its draft Caps and Targets Review, recommending Australia’s emissions cap and target for the first five years of Australia’s ‘cap and trade’ scheme.
While the CCA has come under scrutiny from the new government, its review may ironically provide a favourable outcome for the Coalition, with potential for the CCA’s recommendations to result in a ‘looser’ local market than currently set by the default cap scenario – this may lead to Australian carbon prices trading below already deflated EUA price levels. Such an outcome may provide the Coalition with a means to water down the existing CPM infrastructure in the event that it fails to secure numbers to enact its own Direct Action Plan – a scenario which is far from certain.
In this Market Tracker, we take a detailed look at some scenarios for the CCA’s upcoming draft report, and analyse how or if these outcomes could be used by the Coalition as a policy safety net.
