New ETS advice for fair price on climate pollution

Climate Change Commission recommendations on Emissions Trading Scheme (ETS) settings have been welcomed by climate change minister James Shaw.

“For the ETS to do its job and drive real emissions cuts, it’s vital we have the right settings in place to ensure a fair price for climate pollution,” he says.

“But we also need to make sure that cost does not fall on those of us least able to bear it. This Government is committed to a just transition that leaves no one behind.”

Shaw says ETS settings are updated annually.

“But this is the first time the commission’s independent, non-partisan advice will inform that process. This is due to the ETS reforms we made in the last term.”

Under the ETS, businesses that emit carbon must surrender a carbon credit – or unit – for every tonne of pollution they emit.

Businesses must first purchase their credits in regular auctions.

“It’s important to note that changing these settings does not directly set the price of a carbon credit,” Shaw says.

“Rather, the settings create the scope within which the price of pollution is discovered.”

Officials will consider the commission’s recommendations and provide further advice, with more public consultation and feedback planned for September.

“The ETS is a critical part of our climate toolbox,” says Shaw, adding it is finally performing as it should be – generating $4.5 billion for more action.

“The work we are continuing to do will ensure it remains fit for purpose,” says Shaw.

The commission’s advice will be available on its website.