The term ‘banking’ under the Australia emission trading program is used with reference to emission units for situations where carbon units can be surrendered in years that are later than their vintage year.
Units issued for flexible charge years
Carbon units that have a vintage year that is a flexible charge year (i.e. as from 1 July 2015) do not have a ‘use by’ date. They can be used for surrender in their vintage year and any year after that.
The purpose of allowing banking pursuant to the Explanatory Memorandum to the Clean Energy Bill 2011, is to allow liable entities ‘to shift the timing of their emissions and abatement activities to reduce their costs’. It will also have the effect of ‘smoothing the unit price over time.'
Units issued in fixed charge years
An unlimited number of carbon units whose vintage year is a fixed charge year will be available to liable entities at a fixed charge. These units will not be able to be banked for use in future years.
Those carbon units that are issued free of charge under Parts 7 and 8 of the Australian Clean Energy Act can only be surrendered for the eligible financial year corresponding to their vintage year and, if not surrendered, will be cancelled at the end of 1 February of the next financial year.
Carbon units issued for a fixed charge are automatically surrendered for the eligible financial year corresponding to their vintage year. They cannot be banked.