carbon price will start at $23.00 per tonne in 2012-13 and will be $24.15 in 2013-14 and $25.40 in 2014-15. The prices in the second and third year reflect a 2.5 per cent rise in real terms allowing for 2.5 per cent inflation per year (the midpoint of the Reserve Bank of Australia's target range). Fixed price permits Liable entities will be able to purchase permits from the Government at the fixed price, up to the number of their emissions for the compliance year. Any permits purchased at the fixed price will be automatically surrendered and cannot be traded or banked for future use. Permits freely allocated may be either surrendered or traded until the true-up date for the compliance year in which they were issued. They cannot be banked for use in a future compliance year. Buy-back of freely allocated permits The holders of freely allocated permits will be able to sell them to the Government from 1 September of the compliance year in which they were issued until 1 February of the following compliance year. The price paid by the Government will be equal to the price of the fixed price permits for that year, discounted to 15 June of the compliance year by the latest available Reserve Bank of Australia index of the BBB corporate bond rate, so that the buy-back price reflects the present market value of the permit. From 15 June onwards, the price paid will be equal to the fixed-price permits for that vintage.