Simon Watts: Climate Minister on the gap between carbon credit supply and demand and the need for a "credible" market

The Climate Minister promises he's focused on a 'credible' carbon credit market after yesterday's auction came up empty. 

Not one unit was bought out of 3.5 million available. 

Questions have been raised about the price of the credits and the gap between demand and supply. 

Minister Simon Watts told Mike Hosking that the Government's working on its emissions reduction plan alongside the trading scheme. 

He says they've been working hard to send a signal to the market on what the Government's intent is. 

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Episode Transcript

Speaker 1 (00:00):
But now, as we suggested this time yesterday, the carbon
auction was going to be another bust. No bids were
made yesterday. It's the second auction of the year, so
the government misses out on hundreds of millions of dollars.
The Minister of Climate Change, Simon Watts, is with us
on this. Simon, very good morning.

Speaker 2 (00:11):
To you, Very good morning, Michael. Thanks for having me.

Speaker 1 (00:14):
Not at all. No one's more interested in the carbon
market than I am. So the last government completely and
utterly cocked the thing up. You ironically have done the
same thing by doing good stuff ETS on farmers, etes
on forest. But what that means is if you've put
uncertainty into the market, and when you put uncertainty in
the market, no one turns up. Is that fair?

Speaker 2 (00:33):
I don't think it is fair. The reality is the
effectiveness of the ETS isn't determined by an individual market outcome,
and what we saw yesterday was the reality that demand
wasn't meeting the supply at the price which was in
play on the government market, and there was no participation.
Those units move forward to the next auction. But you know,

(00:55):
these players, if they want units, there is a secondary
market and that's operating, you know, pretty reasonably at the moment.

Speaker 1 (01:04):
The price you're setting your main market at, and if
you just transfer a whole lot of unsold stuff to
the next action, the same thing's going to happen like
it did last year.

Speaker 2 (01:12):
Yeah, well, there's a lot of factors that play in
terms of driving the overarching price and I don't comment
as minister around that, but what I am focused on
is making sure we've got a credible market. Hence why
we stopped the review that the current the last government
had in play, why we've been putting through what we
think is from pretty sensible changes. But the big key
aspect is the release of our emissions reduction plan. What

(01:34):
are we going to do in the next five years
in addition to the ets to get the emissions down,
And that'll be coming out in early July exactly.

Speaker 1 (01:41):
But that's my entire point. No one knows what that is,
and because no one knows what it is now is
turning up to an.

Speaker 2 (01:45):
Oction well fair enough, but not long to wait. And
regards the release of that, you know, we're just over
two fifty days in to this government. There's a lot
on We've had to stabilize a lot of aspects. But
we've been working damn hard in the background to get
a plan and in place to send a clear signal
to the market around what our intent is. Because words
are good, but we need to follow that through with that.

Speaker 1 (02:07):
How far short of Dutton are you and pulling out
of the Paris deal because it's unrealistic.

Speaker 2 (02:12):
Yeah, we're nowhere near where they are at. And I
don't comment on other other countries governments and all of that,
but we've been very clear we're committed to our targets.
We've got prime ministerial targets around our domestic emissions. Early
indications are that we're looking good in regards to the
domestic missions budget. We'll have more information in our plan

(02:34):
around that. But you know, look at it is challenging,
but we're finding the balance between you know, not killing
industry and not doing stuff that isn't practical, letting the
market do what it can, but actually supporting the market
to do what it does. The corporates like from Terror
and that are already doing a whole lot of that stuff.
Why because the customers and the consumers overseas are demanding it,

(02:55):
Not because the government's telling them to do it all.

Speaker 1 (02:57):
Right, Well, we'll look for auctions three or four and
see it works. Simon appreciate it. Ministry of Climate Change,
Simon Watts. For more from the Mic Asking Breakfast, listen
live to News Talks at B from six am weekdays,
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