EU and Australia to link carbon trading

The European Union's Emissions Trading System (EU ETS) is to link with Australia's trading scheme by 2018. That means particpants will be able to use credits from either scheme.

Australia will modify its scheme in order to link with the EU ETS. It will no longer introduce a carbon floor price and will limit the number of Kyoto units of carbon that participants can use to 12.5 per cent of their liabilities.

Ahead of the full two way link, Australian businesses will be able to use EU allowances to meet their liabilities.

The Commission and Australia aim to agree registry arrangements for the interim link by mid 2013. The Australian Government will enter into negotiations on a full-linking agreement, and the Commission said it will seek a mandate to do so in coming months.