Archive for the ‘Emissions Trading (CPRS)’ Category
It’s been an exciting week in politics with Kevin Rudd deposed and the appointment of Australia’s first female Prime Minister.
Prime Minister Julia Gillard has said that she “will re-prosecute the case for a carbon price at home and abroad”, but that “rebuilding consensus” is a precursor to pricing carbon. This doesn’t give me any cause to think we will have an emissions trading scheme in the next couple of years, and if anything it suggests the Labor party might restart consultation and might consider a different policy direction entirely. A carbon tax, perhaps? After years of development and debate will the CPRS be abandoned?
Meanwhile, there is a renewed focus on energy efficiency. The Department of Climate Change was recently renamed ‘Climate Change & Energy Efficiency’. The (previous) Prime Minister established an energy efficiency taskforce and now new legislation has been passed for mandatory disclosure of building energy efficiency. Climate Works Australia, a non-profit ‘think tank’ found in their Low Carbon Growth Plan report that energy efficiency could save the Australian economy over $5 billion dollars by 2020. And the Energy Efficiency Council of Australia have just released their own report (PDF), which said that energy efficiency represented the “biggest, cheapest and fastest” way to cut greenhouse gas emissions and is now more urgent, “particularly with both major political parties delaying a carbon price”.
Perhaps while Julia Gillard is rebuilding consensus on a carbon price, we’ll see some new policies developed to further encourage energy efficiency?
It looks like Labor has shelved plans for an emissions trading scheme for the time being.
At the same time Republican Lindsey Graham withdrew his support for a similar bill in the US over immigration politics, effectively scuttling ‘cap and trade’ in the US until at least the next congress.
It’s been a long time since the US passed their Climate Change Bill through Congress but, so far, no progress has been made getting a similar bill through the Senate. There are some parallels with the passage of the CPRS here.
On Monday a new US Climate Change Bill is due to be presented to the Senate, proposed jointly by Democrat John Kerry, Republican Lindsey Graham and independent Joe Leiberman.
This is going to be the last real chance to get a bill passed before the US mid-term elections and the trio have been working hard to get bipartisan and industry support for the Bill. The outcome of the debate on this Bill is important for Australia for two reasons.
Firstly, the prospects for improving on the Copenhagen Accord will be bleak without meaningful US action. While the US has made a reduction commitment under the accord, as has Australia, we still need to see what policy the US will use to achieve the target.
Secondly, both major parties in Australia are keen to be seen to be in-line with US policy. With a Federal election looming, the outcome of debate on this bill in the US could influence policy here — or at least election posturing.
There have been claims in the media here that ‘cap and trade’ is dead and this means the US will move to a direct action model, in line with Coalition policy. On the other hand, we’ve recently had President Obama’s comments on the 7:30 Report that “you have to put a price on carbon of some sort”, in line with Labor policy.
We should know more details on the Bill this week and have a good idea of its prospects soon enough, but no one is suggesting it will pass easily, and most are suggesting it will fail. If the Bill does fail, does that mean the US won’t meet its reduction target? Does it mean ‘cap and trade’ is dead? And what does it mean for Australia?
I recently attended a presentation by from Frank Litz, a Senior Fellow from the World Resources Institute (WRI). He said that research still to be published by WRI has found that the US could still meet their reduction target without a national ‘cap and trade’ system. There are two reasons why. Firstly, there is already a regional emissions trading scheme in the US and there are two more in development. The Regional Greenhouse Gas Initiative is underway and covers the electricity sector in 10 mid-Atlantic states. The Western Climate Initiative will cover 11 Pacific states across the US and Canada and the Midwest Greenhouse Gas Reduction Accord will cover 7 more US states. It is clear that even without a national ‘cap and trade’ system, emissions trading will be a major driver of abatement in North America.
Also, the President has significant power to regulate emissions through existing legislation, such as the Clean Air Act. The Environmental Protection Authority has recently issued a finding that greenhouse gas emissions endanger public health and welfare with the support of the White House and following a ruling from the Supreme Court. This means they can begin to put in place performance standards on major emission sources such as vehicles, factories, and power plants. Other agencies such as the Department of Energy and the Department of Transport also have powers that could be used by the President to regulate emissions.
It’s important to distinguish this kind of ‘direct action’ from that proposed by the Liberal Party. The Liberal Party’s policy is to make direct investments in offsets and some renewable energy production and to provide grants to companies to reduce emissions. The policy placese no limit on emissions and makes no attempt to regulate emission sources.
Some people have gone further and suggested that the US EPA might have the power to implement a national emissions trading scheme under existing laws. But even without using existing laws there are some reasons to think the US will have a national scheme soon and if not during this congress, then probably in the next one. And if the US puts a price on carbon, Australia is pretty sure to follow suit.
One of the reasons there is doubt that the Kerry-Graham-Leiberman Bill will get enough support this time around is the looming mid-term elections, rather than insurmountable opposition to such a scheme. The Bill will need Republican support to pass and there is a view that after Obama’s success with Health reform, the Republicans don’t want to give the Democrats another high-profile win. Also, President Obama has indicated that the Financial Reform Bill is a higher priority and he also has a highly political Supreme Court nomination to deal with before the mid-terms. So climate change might not get the attention it deserves.
Direct regulation by the EPA is very unpopular with industry and is seen as a more expensive way to achieve emissions reductions. So we can expect to see renewed pressure from industry for a national trading scheme if and when they become subject to more stringent regulation of emissions. Again, there are echoes of the situation in Australia, where industry is calling for more certainty.
What does this all mean for Australia and our upcoming Federal election?
Right now neither of the major parties has a strong or popular position on climate change, but both parties will hope to get some political mileage from the outcome of debate on this bill. If the US bill does get up then it will provide strong support for Labor’s policy and may see Rudd want to make even more of climate change as an election issue. Despite his failure to pass the CPRS Bill and the disappointment of Copenhagen, he is back talking about emissions trading now and definitely sees it as an area where he has stronger credentials than the Coalition.
Tony Abbott seems quite happy to make up new policies on the run, so what he will do is anyone’s guess. If the Bill fails it should be good news for him because the media will interpret this as a trend away from emissions trading towards direct action. However, President Obama will still want to show international leadership on climate change and demonstrate to partners that the US is taking action to meet its commitment under the Copenhagen Accord ahead of COP16 in Mexico. He will probably draw to attention to the trading schemes that are already underway in the US and use his executive powers to start regulating emissions with new performance standards.
This kind of action is quite different to what the Coalition is proposing, which lets polluters off the hook entirely. And the US will probably get a national emissions trading scheme, sooner or later.
Pollytics Election Simulation April 5th 2010 (blogs.crikey.com.au/pollytics/)
Business planning for emissions trading in Australia has been challenging. The hope now is we’ll get some certainty with the next federal election.
If you’re looking for some insight into the outcome of the next election, the pollytics blog written by poll analyst Scott Steel is worth reading. He runs election simulations from the results of newspaper polling. He’s just published the results of his Q1 2010 simulation, which forecasts that Labour will be returned with a larger majority.
He also analyses the probabilities from the betting market. As of Friday the 9th, the implied probability of Labour winning the election is 74%.
What does this mean for the prospects of the emissions trading scheme starting on schedule? Labour is in power now but hasn’t been able to pass their CPRS legislation. Even with a larger majority in the Lower House, they will probably still need minor party support in the Senate. That is, unless they can call a joint-sitting of parliament.
Election guru Antony Green has recently published an article on the prospects of a double-dissolution election. The whole article is worth a read, but I’ll quote his conclusion:
“Political logic points to a double dissolution after July 1, most probably in August or early September. The Government has constitutional justification for a double dissolution, and is building up its political justification based on Senate obstructionism. It has the timing opportunity of holding a double dissolution without losing a year from its term and polls that gives it a chance to remake the Senate. All the logic points to the Rudd government taking its chance.”
There is still a lot of uncertainty and your business plans should consider a number of possible scenarios. However, there is a very real chance that emissions trading will be introduced on schedule, so if you are liable you should be well on your way to getting ready to go.
Next week will see the closing days of debate on the CPRS legislation for this year and our last chance to secure an emissions trading scheme before the COP15 conference in Copenhagen in a weeks time.
However, the media is largely focused on Turnbull’s future as the leader of the Liberal party. He thinks that the Liberal party must have a policy on climate change and that it should support the introduction of an emissions trading scheme. This was their policy going into the last election and they have already endorsed the reduction target commitment of between 5% to 25% that Australia will be taking to Copenhagen. Without an emissions trading scheme in place, Australia will have no mechanism to achieve these cuts.
Turnbull’s position has put him on a collision course with the arch-conservatives within the party led by Nick Minchin. This group have taken the in-fighting into the open with a mass resignation late last week and calls for a second leadership spill. Turnbull is not seeking any appeasement with the climate change denialists within his party and is continuing to fight both for leadership and for the passage of the CPRS legislation. Here he is commenting on Nick Minchin in an interview with Laurie Oakes yesterday:
“[T]hey do not believe that climate change is real, they do not believe that humans are causing it and they do not want to do anything about it. Nick Minchin made that very clear in the Four Corners programme as did a number of his acolytes. What he is trying, what he is is a climate change denier. He stands for doing nothing on climate change. He said a majority of our party room do not believe that humans have any impact on climate change. Now that is a view contrary to the opinion of the vast majority of Australians, contrary to the opinion of every government in the world, and every major political party in the world. Now, if Nick Minchin wins, if he wins this battle, he condemns our party to irrelevance, because what he is saying on one of the greatest issues and challenges of our time, one that will affect the future of the planet and the future of our children and their children, Nick Minchin is saying ‘do nothing’. He wants us to be the ‘do nothing on climate change’ party and he has been, he’s on the record about that, and when he talks about a delay or a deferral, what that means is denial.”
Even if Turnbull can retain the support of most of his party and hold-off the attacks from the ‘Minchin-ites’ the chances of the legislation successfully passing through the Senate tomorrow seem slim. Debate on the bill was very slow on Thursday and there are a large number of amendments still to be debated. Both the far-left and the far-right within Parliament are opposed to the legislation. The Greens because they see it as too generous to industry and the Nationals and elements of the Liberals because they don’t believe in climate change. Here is Penny Wong trying to call out the far-right for filibustering on Friday:
“What is perverse is the unacceptable risk that this generation of right wing politicians are seeking to impose on future generations of Australians. What is perverse is the blatant and wilful disregard of the scientific evidence. Perhaps most perverse is the way in which Senator Joyce and others in this chamber will do and say anything to avoid action on climate change and have played procedural games and filibustered over the time that this debate has been on in this Senate, from back in June until now—simply demonstrating yet again that they are so extreme that, even when they believe there is a risk that the majority of this chamber will support action on climate change, they will not accept it. They will do anything in order to avoid taking action on climate change. I do believe that is perverse.”
What those seeking to delay the legislation are hoping to achieve is unclear. If you are on the far-right and you doubt the science of climate change — perhaps believing the ridiculous views of some skeptics that there is a vast scientific conspiracy on the subject — then you are missing the point that this is now beyond the science. Every major country in the world — from the US to China — is trying to reduce the carbon-intensity of their economies.
While our dependence on coal — both for export-earnings and domestic electricity generation — will make this transformation difficult for us, delaying the transformation is simply delaying the inevitable and is putting our future long-term prosperity at risk. What’s more, for the far-right of politics and the industry groups they support, the current bill before Parliament may be the most generous offer they get.
The far-left’s opposition to the current bill is more understandable, but probably just as silly. The CPRS does appear to reward polluters and it does lock-in — for the time being — a national reduction target as low as 5%. The Green’s advocacy for action on climate change is welcome. For example here is Christine Milne arguing for a larger reduction target on Friday:
“The fact is that the atmosphere does not really care. We are not talking here about what is politically achievable but about what the science—the chemistry and physics—deliver for us: what the earth can bear.”
However, the Greens, in voting against the CPRS legislation, have taken an idealistic and uncompromising position which provides no politically acceptable alternative. It might be have been the case that with their support the original CPRS legislation — perhaps with some of the amendments they are now seeking such as increased support for developing countries — might have been passed earlier this year. As it is now we have a bill further away from their policy ideal, with more support for the coal industry, and Australia no closer to meeting any reduction targets at all.
In any case, the Greens are mostly irrelevant to the current debate and we should be watching for the position that the majority in the Liberal party take tomorrow morning — and perhaps Joe Hockey in particular — for any insight into how tomorrow’s debate will proceed.
But this is all politics and this will all be a distant memory very soon. Australia will soon have an emissions trading scheme, the economy will soon begin a massive transformation in earnest, climate change will grind inexorably forward, the environment will change, and we will do our best to adapt. Our 20th-century fossil-fuel driven society will one day be a distant memory.
These changes, that the conservatives on the far-right fear so much, will not see complete social or economic collapse, but nor will they bring about an eco-utopia that those on the far-left might wish for. The challenge for our political leaders is to take the long-view and to chart a course that we can start today and that will sustain us in the future.
I have my fingers crossed. I hope that we take a step forward tomorrow with the passage of the CPRS legislation and that we take great strides forward next week in Copenhagen.
The government has released the details of proposed changes to the CPRS to obtain Coalition support. The detail includes more transition support for emissions intensive trade exposed industry, electricity generators and coal mines.
East Perth Power Station. Setting a trend for coal-fired power generation in Australia?
Unsurprisingly, the proposed CPRS legislation was rejected in the Senate yesterday in what was a sad day for the environment and Australian politics.
In 2007, Rudd was voted in with a campaign that promised an Emissions Trading Scheme. Even before this Howard had announced his government’s support for an ETS. Here we are, nearly 2 years later following significant community and industry consultation and the chance to show some leadership in the global response to climate change, and our political parties can’t get past the bickering to pass the law or even to enter into meaningful negotiations.
So what now? The Government has two options: Negotiate changes to the bill to gain further support; or do nothing and table the bill in November with the aim of triggering an early election before taking it to a joint sitting. Either way, both approaches will take time – one of the most precious resources in the climate change response.
So what can you do? Rather than wait out the politics, why not use this time wisely to prepare? A cost of carbon is inevitable in some shape or form. Now is the ideal time to start educating your workforce, conduct a risk assessment and develop a long-term strategic response to climate change.
The subject of the proposed first compliance year, 2011–2012, came up in a recent conversation with a client. The latest plan treats the first year in a special way: an unlimited number of Australian Emissions Units (AEUs) will be made available at a fixed price of $10. For those campaigning for a carbon tax, they got one, but only for one year.
The client asked whether they would be able to purchase AEUs in 2011–2012 and bank them to acquit against their liability in future years. Our off the cuff answer was that that wouldn’t be possible, but it didn’t seem to be clearly spelt out in the legislation.
Now that the legislation has passed the lower-house, this is the subject of one of the amendments, and we now have confirmation:
Excess surrender of Australian emissions units with a vintage year beginning on 1 July 2011 [amendments 19 and 20]2.15 Generally, surrender of excess Australian emissions units will generate an excess surrender number which is used by the liable entity in the following year (see clause 143).2.16 Special provisions are needed to address surrender in relation to the financial year 2011–2012. Currently clause 143(3) of the CPRS Bill prevents an excess surrender number occurring where excess free Australian emissions units that have a vintage year beginning on 1 July 2011 have been surrendered.Summary of amendments2.17 The amendment to this clause has the result that no Australian emissions units with a vintage year beginning on 1 July 2011 can create an excess surrender number if more of these units are surrendered in relation to compliance for the first year of the scheme than the person’s emission number.2.18 This covers Australian emissions units issued under the emissions-intensive trade-exposed assistance program, in accordance with Part 9 (which deals with coal-fired generation) and for a fixed charge of $10.2.19 This will ensure that units issued for a fixed charge of $10 are not, in effect, carried over for use against a future liability, and is consistent with not allowing banking for this period. This changed is achieved by the omission of the word ‘free’.
Banking and borrowing rules are something we cover in detail in our Auction master-class.
Greensense, in partnership with tradeslot, recently completed a CPRS Auction Masterclass for Horizon Power. The recently announced delay to the start of the Carbon Pollution Reduction Scheme (CPRS) has given liable organisations the opportunity to better prepare themselves participation in the scheme. The sessions focused on the background to the CPRS, the supporting legislation, the format of the auction, the alternative permit and abatement options, the roles that will be required and different auction strategies that may be adopted. The day ended with a simulated online auction.
Feedback from Horizon Power was extremely positive. The session gave them an opportunity to explore the impact of the auction process, the data required to effectively participate and greater insight into the scheme and how it will fit into their overall carbon management and emissions trading strategy.
With the original timeframes for the CPRS, many organisations were struggling to effectively prepare themselves, but the current delay has allowed the time to have a more strategic approach to emissions trading. These sessions are a great way of kicking off this process. If you are interested in having a tailored CPRS auction simulation in your organisation then contact Greensense.
From The Australian: Rudd signs off on emissions trading scheme compromise.
The highlights:
- Start delayed for 12 months
- Carbon permits will cost $10 per tonne of carbon in 2011-12
- Emissions reduction target of up to 25 per cent of 2000 levels by 2020 (subject to a broad global agreement)
- Additional support for Emissions Intensive Trade Exposed Industries — a “Global Recession Buffer”
- Establishment of the “Australian Carbon Trust” to better support voluntary action
The Australian Carbon Trust seems to have two parts; the Energy Efficiency Savings Pledge Fund and the Energy Efficiency Trust.
The Energy Efficiency Savings Pledge Fund will take the form of a web site that enables individuals to buy and surrender CPRS pollution permits (AEUs) by making ‘pledges’. These pledges will be tax deductible. It will be interesting to see what effect this has on the existing voluntary offset market.
The Energy Efficiency Trust will provide funding for businesses to undertake energy efficiency projects. “For example, the Trust could identify lighting improvements in a business that would cost $2 million to undertake. The Trust would cover this $2 million cost, with the business contributing nothing upfront. The business would then pass the energy cost savings from the lighting improvements back to the Trust at a commercial rate until the full $2 million with interest is paid back to the Trust. Once the upfront capital is paid back, the business keeps the ongoing cost savings.”
The Energy Efficiency Trust will be run in conjunction with The Carbon Trust, a UK-Government funded business that runs a similar scheme for the UK Government.
The legislation for the CPRS will be introduced when parliament resumes later this month. Given the changes above, it seems likely that it will be supported by the Coalition, but not the Greens, which will mean the Government will also need the support of independents Nick Xenephon and Steve Fielding.
In early March, the Senate referred the exposure draft of the legislation to implement the Carbon Pollution Reduction Scheme (CPRS) to the Senate Standing Committee on Economics. The committee published it’s report a couple of weeks ago.
The bottom line is that the committee recommended the bills be passed, largely in their current form. However, the Coalition, the Greens and Senator Nick Xenephon all published their own findings expressing different views.
The Committee made five recommendations in the report:
Recommendation 1
- The Committee recommends that the bills should be passed without
delay.Recommendation 2
- The Committee recommends that the Government coordinates and
advances a whole of government approach to jobs and skills in emerging low
pollution industries.- The Committee further recommends that a process be developed which
ensures effective implementation of all Government programs and policies which
support green jobs and skill development throughout all sectors of the economy.- The Government should also develop Australia’s current and future
skills base to ensure it has sufficient skills to take advantage of emerging
employment opportunities driven though the CPRS and other complementary
climate change policies.Recommendation 3
- The Committee recommends that the government develop policies
complementary to the CPRS to encourage voluntary action.Recommendation 4
- The Committee recommends that the wording of section 14(5) of the
CPRS Bill 2009 be amended so that in making recommendations on emissions
caps the Minister “shall have regard” rather than “may have regard” to
“voluntary action”.Recommendation 5
- The Committee recommends that the Government continues to seek ways
to assist the commercial scale development of renewable energy sources and
sequestration technology as a priority.
The transcripts from the hearings are also available. For example, here in Perth, The Chamber of Minerals and Energy, Griffin Energy, Australian Council of Social Service, Carnegie Corporation, WASEA, Professor Ross Garnaut, and Alcoa all made submissions.
I found these transcripts quite interesting, particularly for their local context. For example the representatives from Griffin Energy talked about the differences between the energy market in Western Australia and the National Electric Market on the east coast.
Perhaps the most troubling comments in the Perth transcripts, for me at least, were made by Professor Garnaut. We already know that most of the revenue from the sale of permits is being redistributed to households and industry as compensation — in some respects defeating the purpose the ETS in the first place.
But, Professor Garnaut suggested that the CPRS might not actually be self-funding and so this compensation could be at the expense of the tax-payer: “It depends on the targets. If you tighten the targets [e.g. from 5% to 15%, then a] higher proportion of the permits will go to the trade-exposed industries if the trade-exposed industries are growing relatively fast. So there is at least a reasonable possibility that the scheme will not be self-funding.”
Reading this report won’t necessarily give you any more insight into when and in what form Australia will start an emissions trading scheme, but I came away feeling more positive that something will happen, and hopefully sooner rather than later.
The introduction of the proposed Carbon Pollution Reduction Scheme (CPRS) will have a significant impact on Australian business. It is essential that your organisation is ready to participate in the auction process and the preparation required should not be underestimated.
To assist you with this Greensense, in partnership with tradeslot (the only technology member of the Emissions Trading Scheme advisory panel to the Dept of Climate Change) has developed a comprehensive auction master class. For those businesses that will be liable to trade permits under the CPRS this provides an opportunity to test your readiness and learn in an interactive, hands-on environment.
The master class is run over the course of a day and ends in an online simulated auction. This is a unique offering where scenarios can be tested in real time within an electronic environment that mirrors the current design of the CPRS platform.
For more information contact Greensense on info@greensense.com.au
Greensense recently attended the Carbon Trading Summit presented by the AIA. This is Part 2 of a series. You may like to start by reading Part 1.
Following Tony Owen, Bruce Robinson, and Tim Shanahan, we heard from Ray Wills. Ray is the Chief Executive of the WA Sustainable Energy Association. Greensense is one of the members of WASEA.
Ray started with a useful primer on climate change and made the point that while climate change is a theory, it is a theory in the scientific sense, not the colloquial sense of something unproven. That is, it is a widely accepted theoretical explanation supported by clear empirical evidence. He took a number of opportunities to discuss the likely impacts of climate on our local region, mentioning the rule of thumb that each degree of warming was roughly equivalent to a 150Km shift in climatic zone.
He also provided a useful reminder of the long period of policy development to ‘put a price on carbon’ in Australia, starting with Rio in 1992. This reminder was particularly salient given the concerns raised by subsequent speakers that the Carbon Pollution Reduction Scheme was being rushed and that industry needed more time.
He finally, and perhaps unsurprisingly, finished with some advocacy for renewable energy describing Western Australia as “the middle-east of renewable energy resources”.
We next heard from Andrew Canyon from the local chamber of commerce and industry. He used the forum to advance CCI’s view that while they supported the concept of an emissions trading scheme, the CPRS legislation was being rushed, the current financial crisis meant industry did not have the resources to respond, and that the Government should “do it once and do it right”. He also took a swipe at renewable energy trotting out the old furfy that renewables could not provide ‘base load power’ and implying that WA should stick with coal and gas.
Andrew was followed by Tony Mahr, the Director of Sustainable Development with the Australian Food and Grocery Council. I’ll cover Tony’s presentation in my next post.
With the anticipated release of the Department of Climate Change’s white paper on the Carbon Pollution Reduction Scheme (CPRS) (due Dec 15), many questions remain around the role and characteristics that the regulator will play, both in carbon trading and also in the implementation of NGERS. It’s a shift the industry will need to make quickly — from design to implementation. Here are some of the signifincat questions that need to be asked:
Big stick or enabler?
Will the regulator be solely responsible for monitoring compliance against the legislation and look for those who are not meeting their obligation, or will they look to become a source of information that supports the process?
Cost recovery
A report completed by the CSIRO entitled “Growing the Green Collar Economy” in June 2008 has estimated that over 3 million green collared workers will be required to help reduce our national carbon footprint. This is across all industry but what about in the case of the regulator? New roles will need to be created to administer the implementation of NGERS. These do not exist today and therefore will be an additional cost to government — which poses the question — how will this cost be recovered?
Size of the regulator
NGERS estimates the threshold coverage is 700 companies. How many staff will it take to regulate the industry?
Audit framework
Work is currently underway to define the auditing framework and guidelines required for NGERS and the CPRS so while legislation has already been implemented the actual regulation is now playing catch up — what is the role of the regulator versus the external auditor?
Workflow
What system will be implemented to support the workflow of submission, follow up, compliance, tracking, reviewing and monitoring? The implementation of the regulatory process needs to be defined in detail and then supported with appropriate tools to ensue the long term efficiency of the system.
Training
The guidelines have been produced and they are predominately based on the GHG Protocol and ISO 14064. The GHG Institute provides training for organisation and project level carbon accounting under this protocol within an online environment. The questions remains though — how do both industry representatives and, more important to this discussion, the regulators, get the required training within the right time frames?
Australia’s Carbon Pollution Reduction Scheme (CPRS) is scheduled to commence on the 1st of July 2010. The goal of the scheme is to transform Australia’s economy and encourage investment in projects that reduce Australia’s carbon footprint.
In this new carbon-limited economy, all Australian households and businesses will be affected through higher energy costs. Carbon intensive businesses will be more directly impacted as liable businesses under the scheme.
The Government will create a limited and reducing number of carbon pollution permits each year that will reflect Australia’s overall cap on emissions. Liable businesses will be required to acquire permits for all of their emissions that aren’t otherwise abated or offset. These permits will be auctioned by the government and then will also be able to be bought and sold on an open market.
Liable businesses will need to respond by developing a new organisational capability: carbon cost optimisation. You can read more about these changes, and options for responding, in our carbon cost optimisation white paper.