Allocating credits

Initial credit allocation

Credits were first allocated free of charge to licence holders, based on a formula that took into account the environmental performance, salty water by-product, employment and economic output of each licence holder.

Credits were reissued when the Protection of the Environment Operations (Hunter River Salinity Trading Scheme) Regulation 2002 was introduced.

The initial credits have different life spans

  • 200 expired on 30 June 2004
  • 200 expired on 30 June 2006
  • 200 expired on 30 June 2008
  • 200 will expire on 30 June 2010
  • 200 will expire on 30 June 2012

200 new credits auctioned every two years

Every two years 200 new credits are created to replace those that have just expired. These new credits have a lifespan of 10 years. For example, the first 200 credits auctioned will span block 2004/183 (1 July 2004) to block 2014/181 (30 June 2014).

This arrangement means that 200 new credits will be available every two years into the future, but the total number of active credits is limited to 1000.

The new credits will be sold by public auction, a process that can reveal the market value of credits. New industry can enter the scheme by buying credits at auction, or by acquiring credits directly from other scheme participants.

Lifespan of credits

Hunter River Salinity Trading Scheme lifespan of credits

Lifespan of credits

Environment protection at least economic cost

Licence holders can choose the most cost-effective strategy for their operation. This can be a mix of

  • buying more credits
  • implementing cleaner technologies or practices (such as re-use or minimising the generation of saline water) so that fewer credits are needed

The long life span of credits allows industry to plan ahead and adjust its processes over time. The result is that environmental outcomes are achieved at least cost to the community.

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