AEU´s, AAU´s EUA´s CER´s….blah blah blah, whats it all mean? Well in terms of the Australian market due to start on 1st July 2010, lets try to shed some light on the greenhouse, so to speak…
AEU´s = Australian Energy Units. With all the various type of carbon markets now functioning in many disperse parts of the world a Unit or Credit is always equal to 1 tonne of CO2. For Australia this is the unit being used to trade carbon and represents tonnes of carbon dioxide emitted into the atmosphere.
Each unit has a value, like a share, which moves up and down for various reasons. Just like shares too!! The current market price is A$17.00 per unit, or per tonne of carbon dioxide. Still with me??
Ok so each affected industry, those that emit large quantities of carbon, will be given a yearly limit of units. e.g. I am a coal producer that has been given a limit of 200 tonnes of carbon dioxide emissions p/year by the govt. Now if indeed I emit 250 tonnes, the only way I can comply with my obligations is to buy the extra 50 tonnes in the Australian Energy Unit market (carbon credit market), at a cost.
Hence we now have a carbon market of buyers and sellers (sellers are those companies that emit less then the 200 tonne limit for example and therefore have “extra” units to sell). Effectively capitalising carbon dioxide emissions.
The politics and environmental arguments about the various merits of the Australain system I will leave for another time, at the very least Australia will now have a transparent system of managing polluters and producers of greenhouse gases.
It’s a start! Please email me if you would like to discuss the topic further… Or of course join the blog discussion.
