Paris UN climate conference 2015: Australian government suddenly backs carbon markets

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After a brutal six-year war on carbon markets, is this the Coalition softening its position?

Eyebrows were raised after the Turnbull government shifted its stance overnight when Foreign Affairs Minister Julie Bishop signed up to a New Zealand-led declaration at the Paris climate summit backing the use of international carbon markets in tackling climate change.

It could pave the way for it to start using international carbon permits to help meet Australia's emissions targets - and perhaps alter its direct action climate scheme. Ms Bishop insisted on Wednesday that any domestic policy changes would not be considered until a review in 2017.

Former prime minister Tony Abbott shunned the use of international carbon permits, once saying that: "money that shouldn't be going offshore into dodgy carbon farms in Equatorial Guinea and Kazakhstan".

A participant puts posters on the mini red Eiffel Tower as NGO representatives staged a sit-in protest in Paris.

But in a speech on Wednesday, Ms Bishop said: "We recognise that international carbon markets are a key part of the global effort to reduce emissions".

The New Zealand-led deceleration, which is not binding, is yet to be released but is understood to focus on working out rules for how international carbon markets will operate after 2020, when a Paris agreement would come into effect.

"It is a declaration that recognises the role that carbon markets may well play post-2020," Ms Bishop said.

Ms Bishop said carbon markets could provide flexibility for companies and countries in meeting commitments. However, as currently designed, Australian business would have little reason to buy international permits under direct action.

Foreign Affairs Minister Julie Bishop has signed Australia up to a declaration supporting international carbon markets.Credit: Alex Ellinghausen

The Turnbull government will consider domestic use of international carbon permits as part of a 2017 review of the direct action climate policy, which could be turned into a form of emissions trading called "baseline and credit" - if the Coalition leadership was so inclined.

Lewis Tyndall, from the land carbon company GreenCollar, told an Australian event on the sidelines of the Paris conference that Environment Minister Greg Hunt had described parts of the direct action scheme as "baseline and credit system" at an private event in the French capital last Friday.

Prime Minister Malcolm Turnbull addresses the conference last week.Credit: AP

While the focus on the direct action scheme has been on taxpayers paying farmers and business to cut emissions, the scheme also includes "safeguards" that aim to set a limits on greenhouse gas pollution from major emitters.

These safeguards have been derided as toothless by a number of policy experts. Consultancy firm RepuTex found that, as designed, the safeguards would allow heavy polluting businesses to increase their emissions because the baselines were set too high and companies had been allowed numerous ways to avoid penalties if they broke the rules.

Opposition climate change spokesman Mark Butler, who is also in Paris, said Labor preferred a "cap and trade" emissions scheme - what the Gillard government's carbon tax would have turned into this year if it survived.

"Even if you disagree with us on that, the safeguards mechanism is not designed in a way that will have any rigour, any discipline on the emissions profile of the 140 largest polluters," Mr Butler said.

"So you need someway to cap emissions as broadly across the economy as possible."

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