AUSTRALIA, NEW ZEALAND IN CAP-AND-TRADE ECON EXPERIMENT

This trading system could teach a lot about cap-and-trade, including as it does so many disparate kinds of economies.

Australia and New Zealand to cooperate on carbon trading
June 15, 2007 (AFP via Yahoo News)

WHO
New Zealand Prime Minister Helen Clark, Australia Prime Minister John Howard,
a huge chunk of the world economy (click to enlarge)

WHAT
Australia and New Zealand will develop compatible cap-and-trade systems to allow free market dynamics to work against greenhouse gas (GHG) emissions.

WHEN
Statement made after talks June 15. Plan to be instituted in mid-2008.

WHERE
Talks and statement in Sydney, Australia.

WHY
- Howard will bring the issue of climate change to the Asia Pacific Economic Council in September and the Australia/New Zealand plan may serve as a plan for a larger trading group. Previously a climate change skeptic, Howard has moved the subject to the center of his economic agenda.
- It is the standard cap-and-trade plan: Permits assigned or auctioned, then traded between companies with excess emissions and those with excess permits.
why learning how cap-and-trade systems work is important: the US will choose one after 2008 (click to enlarge)

QUOTES
- Clark: "We've agreed that we should work hard on seeing if we can get the schemes we are designing to be compatible schemes…At this stage of designing systems we should certainly be comparing notes on verification systems, on forms of measurement and so on…I think there will certainly be interest from a number of countries in the sort of things that we're doing and if we can get it right that sets a model for others as well…"
- Howard: "Clearly, we have taken some different approaches to aspects of climate change in the past, but both of us see the merit in our respective countries of developing emissions trading systems and there is no reason why we can't pool our experiences…"