UPDATED: The Labor Government has decided to change from a fixed carbon price to a floating emissions trading system a year earlier.
The change will mean that instead of the Government setting the price (currently $24), credits can be bought and sold at whatever price the market chooses.
This likely means that the Australian price for credits will drop: if we link to the Europe emissions trading scheme in 2014, rather than from 2015, this could mean a price of around $10 per ton.
Many like Mick Keogh from the Australian Farm Institute think the decision will hurt investment in the CFI.
Still, we need to chill, the longer term plan has always been to link with global markets and this announcement just brings things forward a year. Markets go down and up, the European price could change.
More immediately though, the Government has decided to cut $213 million from the Biodiversity Fund and $143 million from the Carbon Farming Futures program. This is a fair hit just as carbon farming is getting going and will make it harder to corner a market for high quality Australian credits which support Indigenous communities.
The Government will need to confirm the Europeans are willing to link a year earlier than planned and also the arrangements for CFI credits - the Europeans are luke warm on land sector credits and the sale of CFI credits into Europe is still the subject of further discussion - see this fact sheet for more.
The decisions over emissions trading and linking will have implications for the CFI, so we need to keep watching! More to come.