Compliance Permit Options

In managing an organisation's liability under the Carbon Pollution Reduction Scheme (CPRS), it is likely that several options will be utilised. The first will inevitably be to reduce the organisation's emissions where possible, thus reducing the required number of carbon permits. Subsequently, the organisation will need to explore the available carbon credit or 'permit' options and their associated costs. Currently, only the following permits are tradable under Australia's pending CPRS.

a) Australian Emission Units (AEUs)

Description: AEUs are the government-issued permits that companies with a liability under Australia's Carbon Pollution Reduction Scheme can surrender to comply with the Scheme. AEUs can only be bought through government auctions, purchased on the secondary market, or created through investments such as reforestation projects (see below).
Generated by: the Australian Government and sold quarterly at auction or created through reforestation. The number of AEUs released will be reduced by the Government in order to meet its greenhouse gas reduction targets.
Cost: Price cap at AUD$10 per AEU (2011 only), then capped at $40 + CPI

b) AEUs from Reforestation - CO2 Australia's Carbon Sequestration Program

Description: Reforestation is one of several activities under the CPRS that can create AEUs. A forest carbon sink that creates AEUs is a highly attractive option for liable emitters that need to manage their carbon emissions. AEUs created through reforestation are saleable, tradable, bankable and can be surrendered in the same way as any other AEU. Alternatively, carbon sequestered by the trees can be netted of total emissions under the National Greenhouse and Energy Reporting Act. CO2 Australia is currently contracted by a range of organisations to assist them in managing their obligations under the pending CPRS for the supply of AEUs.
Generated by: Planting eucalypts in previously cleared landscapes.
Cost: Function of scale and timing. Available on request.

c) Certified Emissions Reductions (CERs)

Description: Companies liable under the Carbon Pollution Reduction Scheme can surrender CERs to meet their obligations. CERs are credits issued under the Clean Development Mechanism (CDM) for emission reductions achieved by CDM projects in developing countries as part of the Kyoto Protocol. To prove that the project will result in real, permanent, verifiable reductions in greenhouse gases, proof must be provided in the form of a project design document and activity reports validated by an approved third party.
Generated by: A variety of projects including renewable energy such as wind, solar, low impact small hydro, biomass and biogas. Projects have also been developed for a variety of other emissions reductions such as reforestation, fuel switching, carbon capture and storage, and energy efficiency.
Cost: Approx. €10 - €30 per CER

d) Removal Units (RMUs)

Description: Removal units are Kyoto Units issued by developed (Annex B) countries that are generated by forest sinks. RMUs can be surrendered by liable parties under the CPRS.
Cost: Not traded to date.

Contact CO2 Australia on 03 9928 5111 or via email for a confidential discussion about managing your carbon risk.