Future carbon floor price dropped

In my post About the carbon farming initiative, I said that the carbon price will become partially flexible between 2015 and 2018, but won't go lower than a set floor price of $15/tonne of CO2 - equivalent. The Government has now decided not to bring the floor price into effect. Instead, from July 2015, the carbon price will be linked to the European Unions Emission Trading Scheme, and the price will effectively be the same as in Europe.



The European price is currently less than $10/tonne, and the price in 2015 when Australia will link to it will largely depend on Europe's economic recovery (price will increase with more recovery). European permits have traded above $50/tonne in the past.

For more background, read news articles from the Financial Review (written before the changes were announced), and an interview with Greg Combet and others on ABC (28 August 2012).