The past few months in Australia have seen a rapid transformation in the climate change debate. The questions about the need for action that have dominated discussion for most of this decade appear to have largely evaporated. Public concern about the issue appears to be growing every day, fuelled by current drought conditions, media events and a string of high profile announcements from government and the private sector, not just overseas, but also in this country. Namely:
- Meaningful greenhouse gas emissions reduction [in Australia, throughout the Australian economy] requires action on a number of fronts.
- Market-based instruments are critical in harnessing business innovation and the power of the capital markets.
There are a number of other measures that are equally important and just as achievable. These include energy efficiency increases - ranging from vehicle fuel efficiency and building design to household ‘smart meters’ - and generation fuel mix changes and technological developments, like carbon capture and storage. But what does Australian business think about establishing a price signal on carbon (as a means by which to develop these ideas)?
A national, broad based, regulated emission trading scheme would provide business certainty and constitute the preferred method for bringing about a reduction in Australia’s emissions intensity and profile, according to the majority of business executives surveyed in the first Australian PricewaterhouseCoopers report recently released.
In the report, carbon conscious*, a survey of executive opinion on climate change in Australia, 78 per cent of respondents said they would prefer a regulated emission scheme rather than the existing voluntary schemes.
Conducted in September and October of 2006, it provides a unique insight into the personal attitudes of senior management of leading Australian companies at a pivotal time in the Australian climate change debate. A new survey is likely to be conducted in the second quarter of 2007.
At the big end of town and amongst the big emitters that we surveyed, every single one of them viewed climate change as strategically significant to their organisation in the next five years. This is certainly a big shift from the days when corporate concern about climate change was primarily considered to be compliance-related.
In our engagement with industry, it is clear that they are thinking about how to maintain growth in a carbon constrained environment and in many cases they are already factoring a carbon price into their planning. What is needed now is predictability on when and how this will come into play.
The report examines the individual opinions of senior executives predominantly from heavy emitting organisations. 50 per cent of respondents were from the stationary energy and utilities sectors and 20 per cent from mining and resources. Meanwhile financial institutions, a sector which will clearly be vital to the establishment of any derivative market, and professional services organisations, constituted 16 per cent of respondents.
Respondents overall noted that any regulated emissions trading scheme should include all emission-intensive sectors of the economy, rather than simply focusing on the stationery energy sector. Again, this shift from existing schemes like the NSW Greenhouse Gas Abatement Scheme and the States’ proposed National Emissions Trading Scheme (NETS) is significant.
But why is there a preference for a broad based emission trading scheme? It is likely to be have been supported for a number of reasons including:
- it has the potential to significantly contribute to a reduction in emissions; and
- it is expected to increase the number of players in the market which in turn is likely to ensure its liquidity and make it less susceptible to manipulation.
By including all emissions-intensive sectors under a broad based scheme, 60 per cent of respondents believe a meaningful reduction in emissions is achievable.
And what about specific impacts of climate change on Australian business operations?
When asked, not all respondents considered that they were able to identify precisely what was at stake. Many organisations appear to be unable to fully assess the specific financial or economic impact that climate change and emissions trading may have for them.
In summary, there is growing carbon literacy and numeracy in the Australian business community.
From the survey results, there is a clear and widening gap between the thinking inside businesses that have an exposure to the global carbon market and those that do not. Measuring, understanding and reporting on an organisation’s environmental footprint are the all-important initial steps that Australian businesses have to make.”
