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Carbon trading scheme close
By Dennis Shanahan
May 19, 2007 01:00am,23599,21758440-421,00.html

* Australia, US, China in trading scheme
* Sydney declaration' to be announced at APEC
* Will indirectly raise price of coal

AUSTRALIA is developing a regional carbon emissions trading scheme that would include China and the US and could form the basis of a "Sydney declaration" at this year's APEC summit.

As the host of the September APEC gathering, Australia is moving rapidly towards adopting an emissions trading scheme that places a price on carbon and adopts a target for greenhouse gas emissions.

The scheme would use as its bedrock the existing Asia-Pacific Partnership on Clean Development and Climate - which brings together the so-called AP6 nations of Australia, China, the US, Japan, South Korea and India.

It could also be expanded to include other regional partners.

First for US

The possibility of using the AP6, which was created to tackle climate change by promoting cleaner technologies, is the first sign the US is considering an international emissions trading scheme and represents a big shift in the Australian Government's position.

The proposed emissions trading scheme would be based on finding "a mechanism" to set a target for greenhouse gas emissions.

Polluters who could not meet their emissions cap would be able to use the trading scheme to buy credits to emit extra greenhouse gases.

The APEC agenda will be framed by John Howard's carbon trading emissions taskforce report, which is due at the end of this month.

Fossil fuel price rise

It is expected to recommend a carbon trading system that will indirectly raise the price of carbon fuels - such as coal - but not set a formal target for reductions.

The ALP has adopted a target of cutting greenhouse emissions by 60 per cent of 2000 levels by 2050 andjoining the Kyoto trading principles.

The party has not set an interim emissions target.

The Prime Minister has previously refused to set a greenhouse emissions reduction target or join any emissions trading group.

But it now appears likely the Howard Government will adopt a target based on a price mechanism recommended in the emissions trading taskforce report.

Mr Howard has accused Labor of arbitrarily adopting a greenhouse emissions target without proper analysis of whether it would devastate an Australian economy so reliant on fuel exports.

Mr Howard has rejected the Labor premiers' plan for a national emissions trading scheme but is now leaning towards an AP6-plus scheme building on regional relationships and bilateral climate change agreements.

Three weeks ago, Mr Howard announced the $200 million global initiative to combat deforestation, especially in Indonesia, which the British Stern report into the impact of climate change identified as one of the greatest contributors to global warming.

It is expected that other regional countries will eventually become involved in the new emissions trading scheme, with the possibility of some European nations getting involved.

Brown praise for Australia

Gordon Brown, the British Chancellor and successor to Prime Minister Tony Blair, yesterday praised Australia's position on climate change and said he looked forward to working with Australia.

"Let me say I applaud what is being discussed in Australia at the moment," Mr Brown said in London.

Mr Brown said the key to climate change - "and what has eluded us" - is an agreement that all countries are prepared to sign, "America and China particularly".

The US and China are both founding members of the six-nation AP6 and will be in Sydney for the APEC meeting, along with Russia.

Mr Howard wrote to APEC leaders in March putting climate change on the agenda and aligning it with the AP6 philosophy of using technical transfer, such as clean coal technology, to limit greenhouse gas emissions without hurting developing economies.

APEC members are responsible for 60 per cent of the world's energy consumption.

Demand for energy in the Asia-Pacific region is expected to double in 20years.
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