28 Aug 2012

Australia, EU make carbon price pact

8:23 pm on 28 August 2012

Australia and the European Union are to join in what will become the world's largest carbon market.

Under a deal announced by the Climate Change Minister on Tuesday, the Australian market will link to Europe, where the long-term average carbon price is about $A23 Australian per tonne, the ABC reports.

Greg Combet says the $A15-per-tonne minimum floor price will be abandoned.

Mr Combet says Australia's carbon price will effectively be the same as that in its second largest trading bloc, which covers 30 countries with a combined population of 530 million people.

He says it is a very good move for the Australian economy.

Australian businesses will be able to buy carbon credits in Europe when the scheme kicks off in 2015.

But the linkage will be one-way only until 2018, with European businesses unable to buy Australian carbon units until the initial three-year trial period has elapsed.