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The Australian Securities Exchange (ASX) welcomes the Federal Government’s commitment to introduce an Emissions Trading Scheme (ETS).
The introduction of an ETS will provide business with certainty regarding the cost of emitting greenhouse gases. It will also enable industry to reduce emission levels at the lowest cost to the Australian economy.
Robert Elstone, ASX Managing Director and CEO, said: “Australia’s highly developed financial markets are well placed to provide the necessary infrastructure to facilitate both exchange-traded and over-the-counter markets support for an ETS.”
Key to the success of the proposed ETS will be the introduction of a futures market for emission permits and any fungible carbon-related products. A futures market will generate the short and long-term price signals and risk mitigation required to underpin investment certainty.
ASX’s now wholly owned subsidiary, the Sydney Futures Exchange, first evaluated the infrastructure required to meet the needs of an emissions trading system in 1999-2000. Coupled with this experience is ASX’s experience in operating successful electricity derivatives contracts. This will enable ASX to utilise existing market infrastructure and distribution mechanisms for a core group of natural users of emissions derivatives.
“Once sufficient detail of the ETS is known, ASX will be in a position to facilitate emissions trading at the earliest opportunity”, Mr Elstone said.
ASX anticipates that it will be able to introduce a futures market for emissions prior to the issuance of emission permits in order to help industry participants manage risk.
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