Unique New Environmental Investment Opportunity Emerges "Down Under"
When one thinks about Australia, its economy and investment opportunities down under, it is usually something associated with extraction industries such as oil and gas and mining. In 2011, Australia’s economy was the 13th largest national economy by nominal GDP. There have been increasingly large mining and oil and gas projects in the economy. For example, Chevron, one of the largest oil and gas companies in the world, has recently approved going forward with one of Australia’s largest natural gas projects in its history, by giving a formal approval to the “Wheatstone” project off of the coast of Western Australia. Just this year, there have been AUS$50bn spent on energy projects in the state of Queensland alone, particularly in gas and coal extraction.
It is not only energy that increasingly powers the Australian economy, but mining as well. The largest mining company in the world, BHP Billiton, is headquartered in Melbourne, Australia and has invested billions of Australian dollars in mining projects in the country. Even beyond BHP Billiton, there are hundreds of mining companies both large and small involved in the exploration of minerals from zinc and iron ore to uranium. With a resource hungry China located quite close to Western Australia, the country has a ready-made market for its extractive industries.
Given the heavy focus on extraction industries in the Australian economy – sectors which would certainly not be considered “green” or environmentally sensitive - it would probably come as quite a surprise that Australia has recently implemented the most innovative carbon mitigation program in the world aimed at encouraging sustainable energy investment and combating global warming. This law involves a simple and direct tax on carbon emissions and involves an innovative use of so-called carbon credits.”.
As background, let us first understand what we mean by carbon credit. A carbon credit is essentially a permit that allows the company or organization that holds the to emit one tonne of carbon dioxide into the atmosphere. Carbon credits are awarded to organizations, groups or countries that have reduced their emission of carbon dioxide and other greenhouse gases below their allowed quota. The nice thing about carbon credits is that they can be sold in the international market at their current price, thereby allowing the "virtuous" holder of the carbon credit to make extra money if they so choose. This system of carbon credits as a strategy to reduce greenhouse gases was implemented by the United Nations in 1997 in Tokyo as the so-called "Kyoto Protocol" which had 166 signatory countries.Continued on the next page