Issue 03 - March 2009
Break Through the Carbon Jargon
In less than a year Australia will be likely to have a Carbon Pollution Reduction Scheme (CPRS) in place. The Scheme employs a ‘cap and trade’ emissions trading mechanism to limit carbon pollution. Emissions are capped at a level consistent with the nation’s environmental objectives, and the number of tradable carbon pollution credits will be equal to the Scheme cap. For example, if the cap were to limit emissions to 100 million tonnes of carbon dioxide equivalent (CO2-e) in a particular year, 100 million emission permits would be issued for the year.
How will you be affected?
The CPRS works by mandating that every organisation with a facility emitting 25 kilotonnes of CO2-e or more per year must report and purchase a carbon pollution permit for every tonne of CO2-e it releases. The Scheme will directly affect around 1000 facilities, including most electricity generators, mining companies, large property trusts and other ASX 200 companies.
Carbon pollution permits will enter the market either by auction or administrative allocation. The permits will be tradeable and the price of the permits determined by the market. Companies are free to emit at whatever level they choose under the Scheme as long as they surrender an eligible permit for every tonne of CO2-e at the end of the compliance period.
Ultimately, the costs associated with the CPRS will be passed down to other businesses and consumers – resulting in increases in cost for fuel, electricity and energy intensive products and services. At $23 per tonne of CO2-e, estimated energy price increases for small and large energy users are shown in the graph below.
Preparing for the CPRS
The Scheme will directly and indirectly affect every organisation in Australia and it therefore makes good business sense to start preparing now. Companies that are well prepared will mitigate the financial costs of the Scheme and become more price competitive.
How you can prepare:
Advitech recently assisted a large emitter reduce their energy usage in preparation for the introduction of the CPRS. The facility used substantial amounts of energy for the production of iron and steel components for the mineral processing market in Australia and overseas. Click here to view the case study details
How can Advitech help?
Early action will be rewarded. Advitech can help companies prepare for the introduction of the CPRS by reducing the number of permits that a business will be required to surrender to the government, and for smaller businesses, the associated carbon cost passed on by your energy supplier.
For more information contact Jim Kelty, Senior Consultant, on 02 4924 5400 or email us.