Acquiring Carbon Credits Before The Carbon Pollution Reduction Scheme Begins

While formal emissions trading under the proposed Carbon Pollution Reduction Scheme (CPRS) is not due to begin until at least 2010, companies can begin to trade carbon credits before the CPRS starts (click here for our legal update on the CPRS). A recent forward trade in carbon credits is a timely reminder to companies that a forward market for emissions permits is emerging as it becomes increasingly important to factor future carbon prices into decision making regarding carbon exposure. AGL Hydro Partnership's recent sale of Australian Emission Units (AEUs) to Westpac Bank demonstrates that carbon trading is occurring before formal commencement of the CPRS, indicates a carbon price signal, and highlights a number of general issues involving carbon contracting.