The Australian carbon price is predicted to decline from $25 per tonne in 2014-15 to $16 in 2015-16 with the start of the traded market, according to new research from Bloomberg New Energy Finance announced by Bloomberg New Energy Finance Australia Manager, Seb Henbest, who will be speaking at next EcoGen 2011 Conference and Exhibition in Brisbane.
From this point it is expected that the carbon price will track the system’s price floor, which rises gradually to $17.50 per tonne in 2020.
This result contrasts with modelling by the Australian Federal Treasury, which predicts the carbon price will rise to $29 per tonne in 2015 and to $38 per tonne by 2020.
Seb Henbest, manager of carbon research in Australia for Bloomberg New Energy Finance, said: “The way the system has been designed means that from 2015-16 the Australian carbon price is likely to be driven by the cost of buying credits from the international market.”
“As demand from the European Union Emissions Trading Scheme slows however, we expect the international carbon price to fall below the Australian price floor.”
Bloomberg New Energy Finance’s research carries a number of important ramifications for Australia, including:
- The lower carbon price trajectory means the scheme will cost households and businesses less than the 0.7 per cent of gross domestic product estimated by the Treasury
- Lower international prices will mean the government will also collect less revenue from the auction of allowances to fund its clean energy programmes and assistance measures
- The lower the international carbon price, the more international offset credits will be imported for compliance in Australia. Initial estimates suggest this could be up to 75 per cent of Australia’s abatement effort – 15 points higher than the Treasury’s estimate of 60 per cent.
