3 May 2013 — Lower than expected carbon prices will reduce the cost of Australia’s carbon pollution reduction efforts, says the Climate Institute.

A recent Australian Financial Review piece indicated Treasury was set to revise the projected price of carbon in 2015-16 to $15, down from $29. The lower price reduces by about half the $6.7 billion of revenue previously forecasted.

The Climate Institute has used the news to call for a strengthening of carbon reduction policies, claiming a reduction in price means the cost of emissions reduction has also decreased.

“Our analysis and that of other international experts indicates that with the current commitments and actions other countries are taking, Australia’s minimum emission reduction commitment should be up to 15 per cent by 2020,” said Climate Institute CEO John Connor.

“Australia can and should use low international carbon prices as an opportunity to have stronger targets and to help build global ambition to address accelerating climate change impacts,” he said.

The news came as the price of carbon in Europe was at a record low, currently trading at around $4.20, due to an oversupply of carbon permits.

Katherine Lake, a research associate at the Centre for Centre for Resources, Energy and Environmental Law at the University of Melbourne, has argued that an independent carbon bank is a necessary part of an emissions trading scheme to deal with oversupply and reduce lengthy political wrangling. Similar to the Reserve Bank of Australia, the carbon bank would regulate the market and act decisively in order for the market to function efficiently.