Archive for the ‘Emissions Trading (CPRS)’ Category
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.
Recent research by UK-based Ethical Investment Research Services (EIRIS) and their Australian affiliate, the Centre for Australian Ethical Research (CAER), suggests that Australian big business is lagging far behind it’s global counterparts when it comes to climate change response.
The research analysed the responses of 300 of the world’s largest companies against 24 key climate change criteria and compared them to the responses from S&P/ASX200 companies. Almost across the board S&P/ASX200 members trailed behind Global 300 companies in areas of climate change response that spanned governance, strategy, performance and disclosure.
Whilst the report is worth reading in it’s entirity, some of findings are worth particular mention because, in the our opinion, they suggest a clear lack of preparedness by many of Australia’s largest companies to address the business challenges of climate change and carbon pricing.
Many high risk companies still unprepared
The CAER survey found that almost half (48% compared with 35% for Global 300) of S&P/ASX200 companies — representing over AUD 545 billion market cap — were classified as being at high or very high risk of impact of climate change and of those companies over one third (24% for Global 300) had no (or only a limited) climate change strategy in place.
Reporting still limited and mostly unverified
Of the companies most likely to be affected by climate change only two fifths (73% for Global 300) were reporting emissions data and only about one in ten (11% compared with 36% for Global 300) had those reports externally verified.
Reporting is the first and most obvious step to be taken by any organisation hoping to understand and ulitmately reduce it’s GHG emissions footprint - afterall if you can’t measure it you can’t manage it.
Companies should be establishing data collection and reporting practices now that will guide their carbon management strategy. With the NGER Act now in force, large greenhouse-gas emitters are required by law to report annually, with significant penalties in place for non-compliance. The research suggest, at least anacdotally, that some large organisations in Australia may not be in a position to meet their legal obligations.
Lack of targets. Lack of long term strategy
Only 13% (48% for Global 300) of high risk companies disclose, either publicly or internally, short-term (defined in the survey as less than five years) GHG emission targets and a mere 9% (25% for Global 300) have set longer term reduction targets.
This is hardly a surprise given the low levels of reporting, but the lack of long term targets can presumably be taken as further evidence of lack of a carbon management strategy.
Our experiences
We’ve found a general perception that the ‘big end of town’ is in control of the risks and opportunities of climate change and that it’s an area they’re actively managing. This research certainly provides strong evidence to the contrary.
We’ve personally found that businesses subject to NGER, and previously EEO, are making relatively good progress on meeting compliance requirements. However we haven’t seen as much action on preparation for caps on emissions and the trading scheme, which could be implemented as soon as 2010. In very few cases have we seen a strategic or holistic response to climate change or one that seeks to find opportunities in the changes that are underway.
This research makes it clear that Australian business is responding too slowly to the challenges of climate change and that more action is required.
Day 2 of the Carbon Expo began with the same energy, enthusiasm and focus of Day 1. It started with a panel of Australian ex-pats who are working within the climate change industry across the globe. It brought insight into the success and learnings of the European ETS, the rollout and challenges of Clean Development Mechanism (CDM) and the challenges that exist at a global level in shifting Asia towards a carbon centric economy.
Hearing from Australians about the perception of Australia by the rest of the world, it became clear that while Australia used to be on the forefront of trading emission scheme design, we have become a bench warmer for the last few years. With the Rudd government’s attention on the CPRS we will once again move to become a leader – certainly within the Asian market where we punch above our weight. While our carbon output is small, on a global scale our potential to influence world policy debates and channel investments into clean technology development in emerging nations is great, but only if we have a story to tell of how we are succeeding back home.
With a focus back on home of current policy debate, the treasury model and CPRS design, the discussion moved to what industry will be like once implementation begins, considering issues of the role the regulator will play, auditing standards of carbon accounting, impacts of capping the carbon price, how the industry will develop the necessary skills shortage and supply chain impact among other things.
The conference had a great range of workshops focusing on specific challenges and topics of debate and an exhibition of over 100 business representing the emerging industry, showing positive signs that private business was positioning itself to help tackle the problem – all supplementing the main plenary sessions.
As the inaugural Carbon Markets Expo, Greensense would rate it as a success and as the conference closed there was a clear, overwhelming need that it return next year.
The image below shows the exhibition hall at the conference.
