Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Hansard source

There are a range of things that we have sought to put into the scheme learning from the European scheme. Can I make the point first—I should have made it before—that the approach that Australia is taking has, in fact, been perhaps not replicated but echoed in the US scheme in terms of the provision of permits as the way forward.

There are a number of issues in relation to the European scheme, and I can get more technical information shortly. One of the issues there was—and there are a range of views about the volatility of the carbon price—whether or not the market had some sense of where the longer term carbon price would be. One of the reasons we have said five years of caps and then the gateways is to try and give the market better information about where the carbon price in the longer term will be. Obviously, that is important in terms of business planning its investments and also working out what its carbon liability is likely to be and so forth.

I was just clarifying and I think my recollection is correct that under phase 1 of the EU scheme they gave an indication to the energy sector of their allocation for a three-year period. ESAS is a ten-year process but for the EITEIs it is linked to their production in each year. Finally, one of the policy mechanisms that is in the scheme before us is a banking mechanism, where you can bank your permit. That is a mechanism about trying to manage price volatility and one which has been put in after some discussion with a range of people in the business community.