In the first three years of its trading scheme, starting July 1, 2015, Australia will have in place a minimum price of A$15 ($16.46) that emitters must pay for domestic and international permits surrendered to the government.

The provision has been proposed by the Labor government as a measure to avoid a price collapse when Australia moves to a flexible carbon price in mid-2015 from a tax on emissions.

But U.N.-issued certified emissions reductions (CERs) closed in the European market on Monday at 8.95 euros CEREZc1, which corresponds to A$11.64, well below the intended price floor.

Any Australian firm buying a CER at today's market price to use for future compliance would have to pay an additional A$3.36 to the government.

"We also need the price floor on international units," Anthea Harris, chief adviser on climate strategy and markets at Australia's Department of Climate Change and Energy Efficiency told a conference in Wellington on Tuesday.

Harris said a minimum price for international credits was required to bolster the price floor planned for domestic permits auctioned by the government.

Companies paying less than A$15 for their CERs or other international units would need to pay a top-up fee to the government to make up the difference, Harris said.

"The top-up fee only applies to credits bought for compliance," she said, meaning CERs traded on a speculative basis would not be subject to the fee.

Harris told the climate change and carbon conference the government had yet to work out a method on how to estimate the prices companies pay for foreign offsets.

When the flexible-price trading scheme commences in 2015, pending parliamentary approval later this year, companies can use international offsets to cover 50 percent of their carbon emissions.

But the top-up fee could hurt big polluters.

"It has the capacity to be a fairly destructive element," said Geoff Rousel, global head of commodities, carbon and energy at Westpac.

Australia plans to put in place similar quality restrictions on CERs as the European Union, meaning nuclear and industrial gas destruction projects will be ruled out.

However, Harris confirmed at the conference that Australia does not plan to only allow CERs from projects approved by the United Nations after 2013 if they are located in least developed countries.

This is a policy the European Union adopted in a move to pressure major developing countries such as China and India to do more to cut emissions. (Reporting by Stian Reklev, Point Carbon News; Editing by David Fogarty)