The repeal of the carbon tax today will mean little change for business in the short-term, warns Deloitte’s lead partner for sustainability, Paul Dobson:
“While many companies might breathe an immediate sigh of relief, the bottom line is that this issue is not going away. As the government looks to implement its Direct Action policy and the Emission Reduction Fund (ERF), there will be an increased focus on emission reduction projects and activities including energy efficiency. With this in mind companies need to develop a strategic approach to these sustainability issues aligned with their business strategy to accommodate the changing policy landscape.”
Mr Dobson said that in the wake of the carbon tax repeal, there are three immediate considerations for business:
1) Manage the long tail of compliance imposed by the carbon tax
2) Prepare for the Direct Action policy and Emission Reduction Fund
3) Recognise that reporting through the National Greenhouse and
Energy Reporting (NGER) scheme will remain in place.
The carbon tax will have a long tail of compliance. Even though it is back-dated to 1 July 2014, companies still have reporting obligations in October 2014 with final payments due in February 2015 and non-compliance penalties will continue to apply. “Businesses need to make sure they report their liable emissions accurately for the year ended 30 June 2014 and comply with audit requirements as well as ‘true-up’ their free permits,” said Mr Dobson. “In addition, companies should review their contractual arrangements, pricing and supply-chains to ensure that the effect of the carbon pricing removal flows through appropriately – particularly in the energy sector.
“The government has released a white paper and draft legislation on its Direct Action policy centre piece, the Emission Reduction Fund (ERF) and while the precise timing of the introduction of all elements remains uncertain at present, it is likely that we will see the commencement of key components of the ERF in the latter part of 2014.”
There are a wide range of emissions reduction and abatement projects that companies will be able to consider under the ERF. Activities may include upgrading commercial buildings; improving the energy efficiency of industrial facilities; capturing landfill gas; reducing coal mine waste gas; reforesting and vegetating marginal lands.
“Organisations should start reviewing their activities and consider potential projects and determine how to best take advantage of the ERF and the potential funding on offer,” said Mr Dobson. “Planning should start now so that organisations can be in position to have registered projects for participation in the first round of auctions, in the second half of this year.”
Finally, the NGER reporting regime will remain in place for all large companies. Organisations will need to continue to report their carbon emissions, energy consumption and energy production. This is particularly important as the NGER data will be used as part of the safeguarding mechanism under the ERF going forward.
“Despite the political debate around the carbon tax and the best mechanism to achieve carbon reductions, there is bipartisan agreement to reduce emissions (5% below 2000 levels by 2020). While it will be challenging to navigate the changing regulatory environment, organisations should focus on the opportunities presented by emission reduction and energy efficiency projects in order to extract business benefits and at the same time contribute to Australia’s carbon reduction targets,” concluded Mr Dobson.
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