David Bell, Chief Executive of the ABA, said: “Introducing a scheme, which includes a carbon market, administered by the Federal Government, will be an important part of reducing greenhouse gas emissions.”

“The banking sector is pleased that the Government is proposing a market-based solution. It’s in the long-term interests of the Australian economy, society and environment to take early action so that Australia can make a smooth transition, address the vulnerabilities and take advantage of the opportunities presented by climate change.”

“Some commentators are concerned that decisions are being made in the absence of information, such as targets and trajectories. Despite this, the ABA believes the policy settings and scheme framework can be identified and efforts can be taken to move towards implementing the scheme design parameters and the carbon market rules.”

“It’s important that investment uncertainty is minimised through actions that will lead to establishing a price for carbon. The banking sector believes the best way to achieve a price signal is through the market, rather than interventions such as price controls which could cause distortion. The Government should establish a sound framework for the market and then allow it to operate.”

It’s the ABA’s view that a scheme should:

• have the objective of mitigating the adverse effects of climate change by limiting and reducing the release of greenhouse gas emissions through a market-based mechanism which places a price on carbon;
• encourage confidence and reduce regulatory uncertainty by developing a flexible, yet  consistent framework for participants;
• have uniform rules and clear governance arrangements to encourage participation in an efficient market;
• improve investment and operational certainty while minimising artificial distortions on the economy; and
• interact seamlessly with existing legislation, including financial services and tax laws.

Mr Bell added: “The ABA supports initiatives to build the capacity and capability for individuals, businesses and the community to understand and respond to the challenges and opportunities of climate change.”

“The scheme is part of a portfolio of policy responses to address climate change including the development of expertise in low emissions technologies, renewable energy technologies and emissions reductions practices.”

The banking industry looks forward to working with the Federal Government on their continuing consultations leading into the release of the White Paper and draft legislation putting in place the scheme.