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Speaker 1: Whatever Duzl get another carbon auction has failed. There are

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Speaker 1: serious questions now over whether our carbon market is actually

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Speaker 1: working or not. Just over four million units were available

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Speaker 1: to buy today at sixty four dollars each, but they're

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Speaker 1: costing just forty nine bucks on the secondary market, so

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Speaker 1: no surprise, none was sold at the auction. Susan Kilsby

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Speaker 1: is an agricultural economist today and zen and with us now. Hey, Susan, Hello,

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Speaker 1: is this a case of just pricing them too high?

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Speaker 1: Or is it a case of people now being quite

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Speaker 1: nervous about the direction of the climate policy.

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Speaker 2: Well, it really comes down to the fact that there's

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Speaker 2: a lot of units in circulation at the moment, so

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Speaker 2: more than the market really needs. So people don't need

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Speaker 2: to go to these government auctions to buy their units

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Speaker 2: at sixty four dollars when they can buy them elsewhere

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Speaker 2: at forty nine dollars. So essentially it's just the market

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Speaker 2: working as it should when there's an oversupply situation where

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Speaker 2: it's actually reducing the supply by these units not entering

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Speaker 2: the market.

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Speaker 1: Is it not the case, also, Susan, that the ones

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Speaker 1: that were unsold in this auction tryper over to the

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Speaker 1: next auction.

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Speaker 2: Yeah, that's that's correct. So anything's unsold during the calendar

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Speaker 2: year gets transferred through to through to the end of

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Speaker 2: the year. As we saw what happened last year, which

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Speaker 2: we had a lot of options that didn't sell.

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Speaker 1: The same thing is going to happen next time around it, Well,

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Speaker 1: the chances are now increased that the same thing happens

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Speaker 1: next time.

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Speaker 2: Well, they've changed the rules a little bit so there

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Speaker 2: can be a partial clearance so long as they meet

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Speaker 2: those minimum prices, which wasn't the case last year, so

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Speaker 2: it did get harder and harder to clear the clear

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Speaker 2: the market last year. Now there can be a partial clearance,

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Speaker 2: so as long as there's buyers for some of those units,

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Speaker 2: they will sell. But you know, there is a huge

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Speaker 2: amount of units in circulation at the moment, and these

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Speaker 2: really come into the market through through alternative ways. So

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Speaker 2: anything that is any forestry plantings that are registered in

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Speaker 2: the unit into the ets basically create units. So we've

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Speaker 2: got this extra supply coming in from forestry, so these

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Speaker 2: the supply from the government auctions isn't really needed to

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Speaker 2: stuff so great degree.

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Speaker 1: Is that the problem with why we've got so many

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Speaker 1: It's that we just have too many coming in from forestry,

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Speaker 1: not that we're not using enough, we have too many

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Speaker 1: coming on.

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Speaker 2: Yeah, Well, most ETS is around the world, there's a

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Speaker 2: lot operating in a lot for different countries. Most have

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Speaker 2: a cap supplies. There's a limited amount of supply of

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Speaker 2: units that can come in. But the way we've set

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Speaker 2: it up with allowing forestry to be used as offsets

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Speaker 2: as well, there's real uncertainty around that supply that will

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Speaker 2: come from forestry. No one really knows who's going to

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Speaker 2: plant to how many you know, the number of trees

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Speaker 2: and how many will be registered into the scheme. So

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Speaker 2: it creates this huge degree of uncertainty. So it can't

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Speaker 2: really be used as a cap and trade scheme like

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Speaker 2: it's been used elsewhere by sort of pushing the price

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Speaker 2: up to encourage the reduction and emissions as the supply

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Speaker 2: keeps growing.

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Speaker 1: Now that agriculture has been officially exempt again from the ETS,

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Speaker 1: are there other sectors who are also hoping for the

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Speaker 1: same treatment.

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Speaker 2: I'm really not sure. I think most of the other

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Speaker 2: sectors there's you know, there's been our ETS and means

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Speaker 2: and does cover a pretty broad range of sectors, particularly

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Speaker 2: compared with other athists around the world. I don't think

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Speaker 2: we'll see a lot of changes in that, I mean

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Speaker 2: excluding excluding agriculture really came down to the fact that

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Speaker 2: most of the agricultural emissions are may say not CO two,

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Speaker 2: so a different guest. They're really just treating it differently.

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Speaker 1: Susan, good to talk to you. Thank you so much.

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Speaker 1: Susan killsby Agricultural Economists. For more from Hither Duplessy Alan Drive,

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Speaker 1: listen live to news talks it'd be from four pm weekdays,

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