Energy efficiency still vital, despite emissions trading scheme being shelved

The recent decision by the federal government makes it appear that the pressure has been taken off on an emissions trading scheme. But, from our perspective as a carbon management consultancy, we see a virtual emissions trading scheme (ETS) already in place.

This also means that the longer a company leaves it to address their emissions, the more likely it is that there will be a higher carbon price for them to pay in years to come.

The decision by the federal government to defer its ETS to 2013 is in danger of giving businesses a sense of ‘false reprieve’ in terms of moving to reduce their carbon emissions.

Recently speaking at a group of symposiums for O’Donnell Griffin and Haden (member companies of the Norfolk Group) around Australia, I told business leaders that business can no longer afford to hesitate in creating changes to meet the increasing pressures and demands being placed on many fronts to measure, manage and mitigate carbon emissions.

There will be a carbon price across the Australian economy, maybe via an ETS, maybe via an alternative mechanism; but ultimately it is inevitable and really necessary to drive an adjustment to a low-carbon society with greater ecological balance.

The message really has to be: ‘Don’t shelve localised action’. Moves to internalise carbon costs are underway and as the government and other key commentators on the topic have always said: “The longer we leave it, the greater the expense.”

Underpinning moves to introduce a carbon price, there is already the federal government’s 2007 NGER Act, which requires companies producing 125 kilotonnes or more of CO₂ within a fixed financial year to report and disclose their energy consumption and associated greenhouse gas emissions. In the financial year of 2009-2010, that legislation’s threshold (above which a company must disclose its emissions) falls to 87.5 kilotonnes; the following year of 2010-2011 to 50 kilotonnes.

So you can see that the net of companies that must report gets wider from a legislative perspective.

Other moves in Australia include the proposed federal government's Building Energy Efficiency Disclosure Bill (2010). This would see building owners needing to disclose energy efficiency levels before they could lease, sub-lease or sell any office space over 2000 m². This is a significant pressure for owners, and the bill is expected to be introduced around October 2010.

Carbon emissions disclosure is also becoming important for Australian exporters, as domestic and foreign customers of goods and services are imposing their carbon reduction commitments on suppliers. In many industries, where other countries have emission reduction commitments already in place, an Australian company can simply no longer ignore it and maintain market access.

For example, we have one client who has been approached by Armani and Marks & Spencer wanting top-quality Australian wool, but wants to know the emissions intensity of that product across the product’s entire supply chain - from raising the sheep on the farm, through to super washing, spinning, dyeing and freighting. Supply chains are now asking companies to supply that figure.

Cases of carbon-labelling are also emerging. In the UK, for example, Tesco is beginning to request product suppliers to label their products to disclose how many grams of CO₂ there are per gram of product, giving consumers the opportunity to make informed purchasing decisions.

*Matt Shorten, Managing Director, BalanceCarbon