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Issue 5 ‐ March 2012 www.carbonmarketinstitute.org >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> 

CMI Review

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Ready ... Set ... No surrender? The Australian Government is considering four options for a ‘surrender charge’ on international units. There is no perfect solution and a number of trade-offs will have to be made.

Time is running short for carbon traders An Australian financial services licence may be required and there is little time to prepare.

Reporting and Accounting for the Australian carbon market With the start of Australia’s carbon scheme fast-approaching, the time to implement strategies to manage change is short and challenging.


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Carbon Market Institute

Message from the Executive Director Mike Tournier

With 1 July now only a few months away, for many carbon professionals and liable entities the luxury of easing back into a new calendar year was not an option for 2012. Boards are now bringing carbon onto their risk and audit agenda and senior management are being tasked to report back on both compliance and commercial issues associated with the new Clean Energy Legislative Package. Government has been busy too, with a plethora of draft regulations being released for public consultation by various departments and regulators. It’s fair to say that it is truly both a luid and dynamic landscape for all as we count down towards the commencement of the new carbon economy here in Australia. Internationally, we have seen a dramatic lift in interest in business opportunities ”down under” as a result of the passing of the Clean Energy Legislative Package, particularly from organisations based in Europe and the UK whose own markets continue to stagnate. As part of the Institute’s international engagement mandate, in early February I travelled to Europe on a short visit. Working closely with our strategic partners, IETA and the London‐based Victorian Department of Business Innovation team, we conducted a series of road shows to some 200 companies and individuals promoting the skills and services of our members and investment opportunities for the placement of capital and skills into what will be a rapidly developing market here in Australia. We are currently working on a number of follow up opportunities for members and as a result of this visit, we are pleased to announce that we have signed a strategic partnering agreement with the Climate Markets & Investment Association (CMIA), a major player in the green investment space.

in‐depth analysis of the real issues and wherever possible have practical application so that members are able to implement this research into their own operations. I recommend to you our newly launched compendium report Carbon Market Integrity: A Review of the Australian Carbon Pricing Mechanism which focuses on the key aspects of the current legislation and its effect on the market. In the next few months our next key research publication will be released, namely Reporting and Accounting Requirements for the Australian Carbon Market: A Guide for Business which will be a must read for anyone with the responsibly for management of carbon on the balance sheet. But it’s not all about research. Over the last few months we have been proactive in providing a channel to our members in engaging with Canberra on key market issues. We have been working closely with regulators, such as the Australian Securities & Investments Commission (ASIC) to provide input on licensing requirements for those who wish to participate in the carbon markets, in particular speci ic guidance on who will be required to hold an Australian Financial Services Licence (AFSL) which is indeed a front of mind issue for many CMI members. Knowing if your organisation will need to hold an AFSL is an important irst step in preparing yourself for this new operating paradigm as carbon units become inancial products. To assist market participants to understand their obligations, the Carbon Market Institute on 4 April, in conjunction with our inaugural AGM, will be holding an exclusive brie ing in Melbourne with experts from ASIC, a rare opportunity to hear directly about whether your business will require a licence.

Back home, February was also a busy month for the Institute as we launched our eagerly awaited research publication, Implementing the Carbon Farming Initiative: A Guide for Business which was very well received by the market. Complimentary copies of this impressive publication are available to all members; if you have not done so already, please contact us to get your copy today.

Of course, having determined if an AFSL is required, the next step for many will be the journey to obtaining the required skills and competency to hold a licence. I am pleased to announce that the Institute has formalised a cooperation agreement with the Australian Financial Markets Association (AFMA) and working together we plan to develop new curriculum and courseware which will assist members of both organisations to obtain the required knowledge should they require an AFSL.

As the peak body providing leadership and information for businesses and professionals in a rapidly evolving carbon market our role is to facilitate and help build capacity to enable our members to best prepare themselves to maximise the opportunities and minimise the risk. One of our key aims is to bring to market research publications that are valued most highly by our members, are innovative and thought provoking, providing

Lastly a reminder to all, as mentioned earlier our inaugural AGM has been set down for 4 April. As a membership organisation your support and commitment to the Institute is key to our collective success. We have great program with ASIC speaking and we encourage you to get along to this important event. If you cannot make it, please do remember to send in your proxy.


No surrender? >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Lloyd Vas, Markets and Research Manager, Carbon Market Institute

The Australian Government is considering four options for the implementation of a ‘surrender charge’ on international units. What is clear is that there is no one perfect solution and a number of trade‐offs will have to be made. The passage of Australia’s carbon pricing legislation has piqued the interest of carbon traders and project developers far beyond the country’s shores, not least because, from 2015, emitters will be permitted to use international carbon units. However, those crafting the legislation have to tread a ine line between offering an international safety‐valve if domestic demand is high, and the risk that the market be looded with potentially low‐cost international credits. In a December 2011 discussion paper,1 Australia’s Department of Climate Change and Energy Ef iciency (DCCEE) presented four possible options to implement a surrender charge for international units (see Table 1). Such a charge would essentially create a price loor for international credits, and as a consequence signi icantly in luence demand.

There are a number of trade‐offs to be considered in the implementation of the surrender charge and the options presented have generated lively discussion among Australian carbon market participants. Indeed, market participants acknowledge the complexity of the issue. One such organisation, the Australian Financial Markets Association (AFMA), has long opposed price loors and caps due to the distortionary effects they have on markets. AFMA has engaged with DCCEE to explore ways to minimise the distortions and inef iciencies resulting from the loor price through optimising the implementation mechanism. AFMA policy director Damien Jeffree explains: “There are no perfect solutions for implementing a loor price and the corresponding surrender charge for international units. The market is exploring different mechanisms to ind the best option, but it is complicated and there are no easy answers.” 1 Price loor for Australia’s carbon pricing mechanism: Implementing a surrender charge for international units


CMI Review Issue 5 - March 2012

The legislation sets out a three‐year ixed price start, from July 2012, before transitioning to an emissions trading scheme. This scheme will be ‘collared’ for its irst three years, July 2015 to June 2018, with an initial loor price of $15 and an initial price ceiling at $20 above the international carbon price. From July 2018, the price controls are to be removed and prices for domestic and international units will be free loating (see Figure 1).

and thus facilitate ef icient compliance strategies. Such transactions would facilitate engagement with international carbon markets, expediting the development of corporate Australia’s carbon market capability and capacity. On the lip side, this option would create an administrative burden on emitters as they would be required to report every transaction to the regulator.

The collar in the lexible price period is intended to provide market participants with a degree of price certainty and prevent major price shocks, so as to encourage investment in domestic emission reduction activities. The price loor will be implemented by combining a minimum auction reserve price for domestic carbon allowances with a surrender charge for eligible international units – certi ied emission reductions (CERs), emission reduction units (ERUs) or removal units (RMUs) – trading below the loor price. In light of the current supply/ demand dynamic in the international carbon market, international units are likely to trade below the loor price for the duration of the lexible price period.

From the regulator’s perspective, this option is unworkable as it is too easily manipulated. Signi icant headcount would be required to audit each and every international transaction.

Figure 1

For over‐the‐counter trades, it would be dif icult for an auditor to determine if the contract price represented the unit’s true price. Emitters would have an incentive to report in lated contract prices to minimise their surrender charge; an emitter could pay the seller an arti icially high price for international units and subsequently receive a side payment from the seller through the payment of a higher price for some other good or service. The second option is similar to the irst, in that it is based on the price at time of purchase. It differs in that the surrender charge for a particular international unit is based on the difference between the loor price and the observed market price of such units at the time the contract was entered into, irrespective of the actual price paid. An uplift factor would be applied to re lect carrying costs. As with Option 1, this allows a liable entity to effectively manage price risk as management would know the future surrender charge at the time of purchase. Emitters could also bene it from the upside potential of international units. For example, if a purchased international unit goes up in price, the liable entity could sell that unit at a pro it, buy another international unit at the same or similar price, and end up paying a lower surrender charge. This potential to create a one‐way bet may result in a preference for international units and is common to both Option 1 and Option 2 (see Figure 2).

From 2015, Australian emitters will be allowed to surrender eligible international units to meet up to 50% of their compliance liability. Analysts at Thomson Reuters Point Carbon estimate that Australian companies will buy between 350 million and 400 million international credits between 2015 and 2020. This igure represents roughly 10% of the UN’s estimate of the 4 billion CERs that are expected to be issued over the same period. Of the four options put forth by DCCEE to implement the surrender charge, the irst is the most dif icult to administer. Under this option, the surrender charge for an international unit is based on the difference between the loor price and the price paid for the unit. To account for the cost of carry, an uplift factor would be applied to the unit price to better re lect the full cost to the liable entity in surrendering the unit. This option is attractive from the emitter’s perspective as it allows management to lock in a known surrender charge at the time of purchase. This is likely to result in increased hedging activity, which would promote the development of a forward price curve

As more sophisticated emitters naturally seek least‐cost compliance units, such upside potential would reward their engagement in international markets. This would further promote the development of Australian carbon market expertise in advance of possible market linkages with the EU and New Zealand emissions trading schemes. From the government’s perspective, such a preference for international units could result in a revenue shortfall due to a lack of demand in the auctions for domestic units. Depending on the value of the preference for international units, this could potentially compromise the budget neutrality of the Clean Energy legislative package, which includes an upfront household compensation package as well as complementary measures such as the $10 billion Clean Energy Finance Corporation and the $3.2 billion Australian Renewable Energy Agency. The third option details a surrender charge for international units based on the observed market price of such units at the time of surrender. Although administratively the simplest of the four, this option offers little in the way of price certainty to primary and secondary carbon market participants.


Figure 2

P r e f e re n c e f o r i n t e rn a t i o n a l u n i t s using a swap CERs in 2012 trade at $5 ERUs in 2012 trade at $5 BUY

Buy CERs in 2012 for $5

Trade position

-$5

CERs in 2015 trade at $7 ERUs in 2015 trade at $7 SWAP

SURRENDER

Sell CERs in 2015 at $7 resulting in $2 profit

$2

Buy ERUs in 2015 at $7

-$5

Surrender ERUs in 2015 at $7 Pay surrender charge of $15 floor - $7 ERU = $8

-$13

In this hypothetical example, the swap out of CERs into ERUs allows the liable entity to surrender a compliance unit for $13. This compares favourably with the $15 floor price. The government is concerned that Option 1 and Option 2 will result in a preference for international units over domestic units, as the domestic unit would not enjoy the same advantage. If an emitter purchases an international unit in advance, there is a risk that the observed market price may fall prior to surrender, resulting in a higher surrender charge and consequently a total cost to the liable entity above that of the loor price. Liable entities could hedge against this downside price risk by purchasing risk management products from inancial intermediaries. Depending on the availability and cost of option premiums, this surrender charge mechanism may create a preference for domestic units and sti le carbon market development. Initial market expectations are for such option premiums to range between $1 and $5 per tonne of carbon dioxide depending on the time to expiry as well as the volatility of the international carbon price.

number of units at a set date in the future with the regulator as the counterparty. The surrender charge would be detailed in the contract and would be based on a forward price curve which would be published by the regulator each day. An amendment to the legislation would be required to allow the regulator to enter into such transactions. The key questions for Option 4 include how the forward price curve would be developed, how the forward contracts would deal with exceptions and whether the regulator would have the ability to offer such a hedging service. Selecting an option for the implementation of a surrender charge for international units is inherently complex, given the innovative policy design of the Australian carbon pricing mechanism. There are a range of issues to be considered, many of which fall beyond the scope of this article. What is clear is that there is no one perfect solution and a number of trade‐offs will have to be made. The requirement for adequate revenue generation from the auction of domestic units appears to be a key consideration and needs to be balanced against that of allowing liable entities the ability to effectively manage their compliance risk at least cost. There is a concern that, depending on the value of the preference for international units, there could be a revenue shortfall which may jeopardise the budget neutrality of the Clean Energy legislative package. Such concern may be based on the assumption that carbon markets are ef icient and that emitters will generally exploit the lowest cost compliance opportunities irst. This, however, has proved not to be the case when observing market behaviour in existing emissions trading schemes. Company managers understandably tend to focus on their core business activity, beyond which they are generally risk averse. In the early years of a compliance market, there are only a handful of irst movers that seek to gain competitive advantage by taking on the additional risk of engaging in international carbon markets. Over time, their carbon market expertise will spread to the broader market. However, the road to carbon market sophistication is slow and indeed many emitters will continue to forgo the opportunity of least‐cost compliance via international markets in exchange for the simplicity of meeting their obligations through the more straightforward purchase of domestic permits.

From the regulator’s perspective, this option has a minimum of administrative requirements. There are no purchase prices or contract dates to audit and there is no need to assign an uplift factor.

The phased‐in design of the Australian carbon pricing mechanism – from a ixed, to a lexible, to a free‐ loating price – allows the market an opportunity to gradually build capability and capacity. Given the long‐run goal of establishing an ef icient, robust and scalable emissions trading scheme, and with a view to linking with other carbon markets, the development of sophisticated carbon market participants is to be encouraged.

From the perspective of government revenue, this mechanism is the most likely of the four to result in the sale of all domestic units via auction.

The Carbon Market Institute will continue to engage with DCCEE to provide input on the inal design and implementation of the surrender charge.

Option 4 addresses the shortcomings of Option 3 by providing liable entities with an additional service that allows them to lock in a surrender charge in advance. Under this option, the liable entity may enter into a forward contract to surrender a given

* An excerpt of this article can be found in the spring 2012 edition of Environmental Finance’s Global Carbon magazine.


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Carbon Market Institute

Time is running short for carbon traders to comply with the Australian Corporations Act >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> By Scott Farrell and Jim Boynton King & Wood Mallesons

Carbon units which are eligible for use under Australia’s carbon pricing mechanism are not only subject to the Clean Energy Act but they are also subject to the Australia’s inancial services laws, including the Corporations Act. In fact, Australian inancial services laws started to apply to eligible international emissions units from 8 December 2011. Organisations which are involved in carbon transactions need to be aware of these laws as an Australian inancial services licence covering carbon units might be required, and the consequences of not holding one if needed are severe. The time to prepare is now running short. Draft regulations propose the deferral of the licensing requirement only until 1 July 2012 – a timeframe which many market participants consider to be too soon. In any case, the deferral will not defer the operation of any other inancial services laws which can be operating now. The Australian Securities and Investments Commission (ASIC) has just released a guide outlining when it considers an Australian inancial services (AFS) licence is required. Potential traders in carbon units should carefully consider this and take appropriate advice. Australian carbon units, Australian carbon credit units and eligible international units (referred to as “Australian CPM” units in this article) are not just an environmental product, under Australian law they are inancial products too and are subject to most of the same laws as governs transactions in shares, derivatives and bonds.

Australian inancial services licence may be required A person who carries on a business of providing inancial services in relation to Australian CPM units in Australia must hold an AFS licence which covers the provision of the inancial services or satisfy a licensing exemption. Financial services include dealing in units (unless the dealing is made on your own behalf), providing inancial product advice, making a market in units and providing custodial or depository services in relation to units.  


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CMI Review Issue 5 - March 2012

The draft regulations which are to defer the AFS licencing requirement until 1 July contain some useful licensing exemptions including for organisations who manage the inancial risks in relation to the surrender, cancellation or relinquishment of units. However this proposed exemption will not necessarily assist project operators who at the beginning of a project wish to manage inancial risks of ACCUs that are issued during the life of project (for example, by entering into a forward contract).

in regulating the units. By way of context, previously the law has allowed a one or two year transition for organisations to obtain a licence.

Applicants must convince ASIC to issue or vary their AFS licences to cover their activities in relation to units. ASIC is yet to inalise its policies on what will be its training requirements for advisers in relation to units or its inancial requirements but sensibly is proposing an 18 month transition period for advisers to complete their training. Apart from training advisers, potential applicants will to be able to comply with all licence conditions from the date they lodge their application.

There is also a proposed exemption for dealing, providing advice or making a market in units if the inancial services provider is not in Australia and the services are provided to a professional investor. This will assist offshore counterparties who provide those services but will not assist them if they also provide custodial or depository services in respect of units. This could prevent offshore custodians that currently rely on other AFS licensing exemptions from holding units for clients in Australia unless they obtain an AFS licence. Many organisations will need an AFS licence or a licence variation in order to conduct their activities with respect to Australian CPM units. However, many of these will not have enough time to obtain an appropriate licence under the proposed deferral. Unfortunately this will mean that a number of activities will not be able to be lawfully carried out.

Obtaining an AFS licence for units is not possible at the moment Traders, project operators and others who do not currently have an AFS licence and require one will need to apply for one. This will require the investment of considerable time in preparing a comprehensive licence application and also ongoing inancial, compliance and other resources. This includes having responsible managers with experience and quali ications in relation to carbon and other units. Obtaining and varying licences is a well‐worn path for inancial services organisations but might be novel and challenging for other organisations. A new ASIC regulatory guide and consultation paper provide some assistance in this regard. However, the story of the last decade in obtaining licences for other parts of the inancial services business in Australia has shown that there is no real substitute for an experienced advisor. It will be experience with ASIC and the Corporations Act which will count. It is also useful to remember that existing AFS licensees who will provide inancial services in relation to units will need to apply to vary their licences. As a practical matter, it usually takes between three to six months for applicants to obtain an AFS licence or a licence variation. The proposed regulations give less than four months and according to ASIC may give less than two months. For Australian CPM units it might take even longer than usual because ASIC is not experienced

ASIC will accept not applications relating to Australian CPM units until the date the draft Corporations Regulations are inalised and says that this is likely to occur in May.

No proposed transitional relief from other inancial services laws Even if an organisation does not require an AFS licence, it must comply with other inancial services regulations. This includes complying with the Anti‐Money Laundering and Counter‐ Terrorism Financing Act including reporting obligations to AUSTRAC and a requirement to have an AML/CTF Program. Apart from the Corporations Act, there does not appear to be proposed any regulations to defer the operation of the other inancial services laws and so strictly organisations carrying out activities in relation to eligible international emissions units should have been complying with those laws since 8 December 2011. Further, until the proposed Corporations Regulations become law, organisations carrying out activities in relation to eligible international emissions units should have been complying with the Corporations Act since 8 December 2011 which has been impossible if they needed an AFS licence. Presumably ASIC should be sympathetic to organisations in those circumstances.

Conclusion Entities which are intending to participate in transactions in, or provide services with respect to, the units eligible under Australia’s carbon pricing mechanism need to be aware that they may be providing inancial services by doing so. This makes Australia’s extensive inancial services regulatory regime relevant as described in ASIC’s regulatory guide and consultation paper. The proposed regulations relating to licensing for carbon transactions have many welcome aspects and hopefully will be made as soon as possible. They should give organisations carrying out activities in relation to eligible international emissions units now some comfort. However they are not as extensive as some might have hoped and time is rapidly running out for any organisation that requires an AFS licence by the proposed deferral date of 1 July 2012.


Reporting and Accounting Requireme Carbon Market: A Guide for Business

LAUNCH With the start of Australia’s carbon scheme fast‐ approaching, the time to implement strategies to manage change is short and challenging. It is important to identify and act on key issues now to minimise disruption and avoid surprises. The Carbon Market Institute will be launching its guide for business, Reporting and accounting requirements for the Australian carbon market at events in Sydney and Melbourne. The Guide, researched and written by Ernst and Young in collaboration with University of Melbourne Associate Professor in Accounting Brad Potter, has been designed to assist businesses to prepare for these changes. The guide is designed to assist a wide audience to prepare for the carbon scheme’s commencement ‐ from leaders of entity‐wide carbon‐readiness projects to better understand the inancial implications of the scheme at a high level, to those in inance roles. The Guide discusses what businesses need to consider in the face of this imminent change. It explores the treasury, inance and tax impacts and will help readers identify whether they are armed with the resources, information and knowledge they need to adapt. The following section represents a preview of the key questions addressed by the report. The crucial considerations are highlighted to give a sense of their scope and possible impact.

How will a carbon price impact my cash low? Cash low management is one of the most pressing business concerns arising from the scheme. A price on carbon will directly affect the cash low of all liable entities. There may also be indirect impacts for both liable and non‐liable entities. Businesses should consider how they will manage changing liquidity requirements and working capital impacts.

Will I need to update my treasury risk management policy? The carbon scheme is likely to change business and inancial risk exposures. Treasurers should understand how the scheme will operate and how the business will be impacted. There should be a plan to manage any resultant exposures.

How will my inancial reporting timetable impact my NGERS reporting requirements? Carbon emissions data will impact the inancial reports. Financial reporting of carbon data will make this information even more important to a wider variety of stakeholders. Therefore we expect this data will come under increasing scrutiny. The timing of when the National Greenhouse and Energy Reporting System (NGERS) emissions data is prepared and received will need to be considered as the inancial reporting balance dates may not coincide with an entity’s existing NGERs reporting timetable. How should entities manage this?

How will I account for my emissions? There is no speci ic accounting guidance to account for carbon units and related liabilities. In countries where emissions trading schemes have been in operation for some time a variety of approaches have emerged. These are: a) IFRIC 3 ‐ Despite being withdrawn, IFRIC 3 can be applied. Carbon units are accounted for as intangible assets, initially measured at fair value. In the case of granted units, any difference between the amount an entity paid for the unit (generally nil) and its fair value is recognised as deferred income on the balance sheet and is recognised in income over the period the emissions are made. As emissions are made, a liability is recognised at fair value. b) Net liability approach – Free carbon units are measured at nominal amount (that is, zero). The entity records a liability only to the extent that actual emissions made exceed the units granted and still held. The provision is measured at the current market price of the units, unless the entity applies an accounting policy where purchased units impact the measurement of the provision. No provision is recognised for the expected future shortfall of units as, at the reporting date, there is no liability in respect of future emissions. c) Government grant approach ‐ This is similar to the requirements under IFRIC 3. However, rather than measuring the liability at the present market price of the permits, the liability is measured by reference to the amounts recorded for the emission permits held as assets that will be used to settle the liability.


CMI Review Issue 5 - March 2012

ents for the Australian

As part of an entity’s budget and planning process, it should consider which accounting policy is most appropriate. This analysis should include determining how the ixed and lexible price periods may impact this accounting policy.

How should I communicate my carbon data to the market? Entities will need to determine how to communicate the true impact of carbon on their business. This message will be in luenced by accounting policy choice and further complicated by potential diversity in entities’ accounting choice which may lead to a lack of comparability between entities.

LAUNCH EVENT STRICTLY LIMITED Register at www.carbonmarketinstitute.org

SYDNEY Wednesday 2 May 2012 (12.00pm ‐ 2.00pm)

What are the tax implications of a carbon price?

Ernst & Young, 680 George Street, Sydney CBD

The carbon scheme has implications for an entity’s tax position. Entities need to ask themselves whether they have a strategy to manage the after tax cost of complying with a carbon pricing mechanism. Are they well placed to take advantage of tax opportunities and to avoid issues? Have they thought about deductibility and timing issues? What about the import of international units?

Where to next? The Guide also outlines a 10‐step checklist to assist entities to determine whether they have considered all relevant implications.

MELBOURNE Thursday 3 May 2012 (9.00am ‐ 11.00am) Ernst & Young, 8 Exhibition Street, Melbourne CBD


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Carbon Market Institute

Carbon Farming Initiative Workshop for Indigenous leaders >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> Indigenous community leaders from across Victoria took the irst steps to understanding the Carbon Farming Initiative (CFI) legislation by attending at a Carbon Market Institute (CMI) workshop in Melbourne on 9 March. Attendees represented a number of Koori communities including Framlingham, Yorta Yorta and Rumbalara. Importantly there was also Indigenous representation from the Victorian Aboriginal Legal Service, Department of Justice and Victorian Department of Primary Industry. CMI in partnership with the Victorian Commissioner for Environmental Sustainability initiated the workshop to ensure Indigenous communities, often owners of land that could be used for the production of carbon offsets, are not left behind in grasping the opportunities afforded by the CFI. Commissioner for Environmental Sustainability Professor Kate Auty had been approached by a number of community leaders interested in the CFI and its implications for native title holders. As a CMI member, she saw the Institute as the best place to go to address these issues and kick start the conversation among Koori leaders. Damon Jones, from international legal practice Norton Rose, facilitated the workshop using the CMI publication, Implementing the Carbon Farming Initiative: A Guide for Business, as the basis for his presentation. Damon covered the key issues of permanence, additionality and project methodology. “It’s a complicated piece of legislation, so it’s important to understand the risks associated with it,” says CMI Education Manager Peter Robertson. Implementing the Carbon Farming Initiative ‐ A Guide for Business can be purchased via www.carbonmarketinstitute.org. Members – hard copies available free of charge. Non‐members – $50 including GST per copy plus postage.

“CMI's guide is a comprehensive tool designed to assist those interested in the CFI to understand and assess opportunities in this newly established market.” “The key point made at the conclusion of the workshop was that there was much for all to learn about the CFI and that Indigenous people should not feel as though they were coming late to the topic given the engagements and relationships established by the workshop,” says Robertson.

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AEMO education courses and CMI membership The Australian Energy Market Operator (AEMO) manages energy markets across southern and eastern Australia. CMI members wishing to broaden their understanding of AEMO’s role and its energy markets are invited to consider attending AEMO’s education program. A number of courses are available to industry stakeholders that provide an overview of the National Electricity Market (NEM), the Victorian Declared Wholesale Gas market (DWGM) and the Short Term Trading Market (STTM). Please check out the AEMO education website at http://www.aemo.com.au/corporate/education.html for dates and locations before registering your attendance. Further information can be directed to education@aemo.com.au


CMI Review Issue 5 - March 2012

CMI Calendar of Events >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>

4 April

Melbourne

Annual General Meeting and ASIC presentation – Do you need a licence to participate in the carbon market?

11 April

Melbourne

CMI‐IGCC co‐event – Carbon Market Integrity: A Review of the Australian CPM

19 April

Sydney

CMI‐AFMA co‐event – Carbon Market Integrity: A Review of the Australian CPM

20 April

Brisbane

CMI introduction at UQ Customs House

2 May

Sydney

Launch of Reporting and Accounting Requirements for the Australian Carbon Market: A Guide for Business

3 May

Melbourne

Launch of Reporting and Accounting Requirements for the Australian Carbon Market: A Guide for Business

3 July

Melbourne

CMI Academic Symposium ‐ Building Capacity for the New Carbon Economy

7‐9 November Melbourne

Carbon Expo Australasia 2012

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Become a CMI member today With carbon pricing set to begin on 1 July and complementary measures such as the Carbon Farming Initiative already up and running, it’s more important than ever to ensure your business is ready. For more information about the current program of activities and member bene its, contact the CMI Secretariat either by phoning +61 (03) 9245 0900 or emailing info@carbonmarketinstitute.org

FULL MEMBERSHIP Corporate Company turnover

Annual fee (GST inclusive)

Up to $5 million ‐ includes three named Corporate Full Members

$4400

$5 million and above ‐ includes ive named Corporate Full Members

$6600

** Additional named Corporate Full Members Individual Full Membership

$825 per person $1650 per person

ASSOCIATE MEMBERSHIP Individual, NGO or Academic Associate Member

$715 per person

Full‐time Student Associate Member

$110 per person


U P CO M I N G P U B L I C AT I O N S . . .

CARBON MARKET INTEGRITY A Review of the Australian Carbon Pricing Mechanism The Carbon Market Institute has released its latest report Carbon Market Integrity: A Review of the Australian Carbon Pricing Mechanism. This research analyses the lessons learned from other emissions trading schemes so as to ensure best practice market design and, from the outset, the integrity of the Australian carbon market. This signi icant piece of research is accompanied by three information briefs which provide a comprehensive review of the legislative frameworks which underpin the EU, New Zealand and Californian emissions trading schemes. The compendium report is available on the CMI website at www.carbonmarketinstitute.org

Carbon Market Institute Level 1, 486 Albert Street

East Melbourne VIC Australia 3002

W www.carbonmarketinstitute.org

T (03) 9245 0900 E info@carbonmarketinstitute.org Copyright and Disclaimer Copyright Š2011 the Carbon Market Institute (the CMI). No part of this document may be reproduced without consent. Permission is granted for normal and limited quotation provided that credit is given to the CMI. The opinions expressed in this publication do not necessarily re lect the opinions of the CMI directors, sponsors, partners or members. No responsibility is accepted by the CMI, its directors, sponsors, partners, or members or the authors of any articles for the accuracy of any information contained in this publication or the consequences of any person relying upon any information. The contents of this publication should not be relied upon as a substitute for professional advice.


CMI Review - Issue 5