New South Wales Bins Carbon Trading Scheme

I am quoted in today’s Point Carbon article on NSW’s announcement that GGAS is ending. (Readable with a free trial.)

Australian state New South Wales will abandon its Greenhouse Gas Abatement Scheme (GGAS) on July 1, when the federal government introduces a tax on CO2 emissions, state Energy Minister Chris Hartcher announced Thursday.

The baseline-and-credit scheme has operated since 2003, targeting emission cuts primarily in the state electricity sector, but also in industry and forestry.

 The phase-out was expected, but leaves market participants with 16 million surplus credits that will be ineligible for use in the nationwide scheme.

 This spurred Minister Hartcher to demand in local media Thursday that the federal government compensate the credit holders.

 However, market observers dismissed Hartcher’s claims.

 “It’s been clear from the outset of GGAS to all participants and government that GGAS would finish when a national carbon pricing scheme started,” said Martin Jones, a researcher at the University of New South Wales.

 “The problem of excess supply and an upcoming end date have been on the radar for at least half a decade, and insufficient efforts to address it have little to do with the federal government,” he told Point Carbon News.

Update on Thursday, April 5, 2012 at 13:50 by MCJ

The background to this story is that, on Wednesday afternoon last week, I’d had a chat to Imre Salusinszky from The Australian about the NSW GGAS, a state baseline-and-credit emissions reduction scheme that was shutting down when the national emissions trading scheme started on July 1. (In short: a company’s levels of greenhouse gas emissions are projected into the future: this is the baseline. By reducing its emissions, a company receives a ‘credit’. It can also buy credits from/sell to others. Each year, companies are required to submit credits to the Government.) From its conception, GGAS was intended to run only until a national scheme superseded it, but its closure had not officially been announced until Thursday. (The Oz had advance notice of the announcement.)

The issue was that the GGAS scheme had generated millions more credits – emissions reductions – than required, and while the holders of these credits would have used them to meet their submission requirement in later years, there obviously wouldn’t be any later years now that the scheme was closing. The Oz had a quote from the NSW Energy Minister calling for the Federal Government to compensate the holders of NSW GGAS credits, and a quote from the Federal Government saying it was the state’s problem.

Salusinszky asked me some questions about GGAS – e.g. What was the highest price the credits had ever reached? When was the scheme originally due to end? Could/should the two schemes coexist? Has GGAS worked? – and I answered them as best I could, sending a follow-up email with details on answers on which I was unclear. The line Salusinszky wanted to take seemed pretty clear – the national government was leaving companies in the lurch – and while I thought this a silly stance, I hoped to at least temper the piece with more realistic information.

When the draft piece arrived, my suspicions were confirmed: it clearly portrayed the NSW scheme as being victim of the national scheme; worse, it misquoted me as supporting a phased reduction of GGAS, when I had quite clearly said there was no point in the national and state schemes coexisting. Perhaps Salusinszky misheard me; perhaps he decided that, on the basis of my support for both national AND state schemes in The Conversation, it’s what I should have said; perhaps the line came from his co-author, Annabel Hepworth, who’s a bit of hack. In any case, I corrected the errors and sent the piece back.

The piece, “Carbon tax to scuttle state’s pioneer ETS”, left my quotes out entirely. I can only imagine why.

I criticised the article on Twitter, pointing out not only its flaws but that the authors well knew better, as I’d told them so the previous day. Following that, the Thomson Reuters Point Carbon reporter covering climate change policy in the Asia-Pacific, Stian Reklev, got in contact with me.

Update on Friday, April 13, 2012 at 18:58 by MCJ

The whole article is freely available in Carbon Market Australia-New Zealand April 13.