The Australian Securities Exchange (ASX) is applauding the Australian government’s commitment to introduce an emissions trading scheme.

The exchange says that the introduction of such a trading scheme will provide business with certainty regarding the cost of emitting greenhouse gases. It will also enable industry to reduce emission levels at the lowest cost to the Australian economy.

“Australia’s highly developed financial markets to facilitate both exchange-traded and over-the-counter markets support for an ETS,” said Robert Elstone, ASX managing director and CEO, in a release.

The exchange says that the success of the proposed ETS will be dependent on the introduction of a futures market for emission permits and any fungible carbon-related products that will generate the price signals and risk mitigation required to provide investment certainty.

The ASX anticipates that it will be able to introduce a futures market for emissions prior to the issuance of emission permits in order to help industry participants manage risk. “Once sufficient detail of the ETS is known, ASX will be in a position to facilitate emissions trading at the earliest opportunity”, Elstone said.

The Sydney Futures Exchange (now owned by the ASX), first evaluated the infrastructure required to meet the needs of an emissions trading system in 1999-2000. The ASX also has experience operating successful electricity derivatives contracts. This ASX says this experience will enable it to utilize existing market infrastructure and distribution mechanisms for a core group of natural users of emissions derivatives.