Australia's emission trade gives price indication

The first trade in Australian Emissions Units (AEU) since the government released its blueprint for a carbon trading scheme provides an indication of the future cost of polluting in Australia.

Newedge senior energy trader Donovan Marsh said his firm handled a transaction of 10,000 AEUs expiring on June 20, 2012 at €11.4 each, helping to establish a price for carbon trading in Australia ahead of the start-up of the government's scheme.

Australia, the rich world's largest per-capita emitter of greenhouse gases, plans to cap emissions from mid-2010 and introduce a carbon-trading market where businesses that pollute less can sell emission credits to those firms that pollute more.

AEUs will be the basic tradeable unit of the scheme.

They are already being traded in an over-the-counter market where brokers match buyers and sellers.

The price of the Newedge trade was close to current pricing of Carbon Emission Reduction (CER) units on the European Climate Exchange. Calendar 2012 CERs were last quoted at €11.24 a tonne, Mr Marsh said.

He did not disclose the parties involved in the Australian transaction.

Companies such as energy group AGL Energy Ltd have been selling AEUs to companies wishing to reduce their risk or accumulate carbon credits ahead of the planned introduction of a carbon trading scheme.

The first trade in AEUs was in May last year when AGL sold units to Westpac Banking Corp. Ltd at €9.6 a tonne. At the time CERs were selling on the European Climate Exchange at around €20.