The Use of Financial Services Law to Regulate Emissions Trading

Abstract

This article examines the use of financial services law (securities regulation) to regulate and to reduce emissions trading to reduce the causes of climate change—with reference to Australia's use of financial services law from 2012. The Australian financialization model, introduced by the previous Australian (Australian Labor Party) government, is planned to be repealed in mid-2014 (depending on votes in the upper house of the Australian parliament) by the conservative (Liberal-National Party coalition) government as its ‘first order of business’. At the time of writing in April 2014, the carbon price is in full operation. The government won office in September 2013, partly in the wake of an electoral backlash against the ‘carbon tax’. Australia's climate change model was based on defining emission reduction units as financial products under the Corporations Act, which resulted in the regulation of the market for trading emissions reductions becoming the responsibility of the financial services regulator, the Australian Securities and Investments Commission. This article examines the financial services model which treats emissions as financial products, regulated by financial services laws which provide inter alia for trading on regulated markets, the licensing of advisers, the expectation of high standards for secondary trading, the recognition of consumer rights under consumer laws and the continuous disclosure of information to financial markets.