Why is a Carbon Pollution Reduction Scheme being implemented?
The issues of “climate change” and “global warming” are contentious and there are many differing views about whether or not global climate patterns are changing and if so, if humans have anything to do with this. The Government is basing its policy on the scientific advice it has received and is taking steps to reduce carbon pollution production in the future. There is general agreement throughout society that in order to reduce the impact of climate change, pollution levels must decrease.
As Australia has signed the Kyoto Protocol it is under obligation to reduce its emissions. A Carbon Pollution Reduction Scheme is a way of achieving this.
How will the Carbon Pollution Reduction Scheme work?
The Australian Government will set a limit on the amount of carbon pollution allowed each year. Permits will then be issued to approximately 1,000 businesses, the “big polluters”. To qualify for inclusion into the scheme, a business must emit 25,000 tonnes of greenhouse gas per year. The Government will monitor the emissions of all businesses included in the scheme.
The number of permits available will be limited (as per the Government’s emissions cap).The permits will be able to be bought and sold (by auction or secondary markets). If a business has excess permits, the permits can be sold. If a business requires additional permits due to the amount it has emitted, extra permits will have to be purchased. The market will decide the cost of permits.
The cost of permits will encourage businesses to operate in an environmentally friendly matter so that its costs decrease. This may mean employing new technologies or strategies.
For businesses emitting less than 25,000 tonnes of greenhouse gas per year, the Carbon Pollution Reduction Scheme will not apply.
Will the motor industry be effected?
As most, if not all, businesses in the retail motor trades will not be included in the scheme, the purchasing of permits and the monitoring of emissions will not be required at this stage.
However, there will be flow on effects that will affect the motor industry through the increase in costs of goods and services. The increase in costs associated with producing certain goods due to the prices paid for permits will mean that increases will be passed down the supply chain.
This may mean an increase in prices when the scheme comes into place as the market jostles to adjust. Over time, the businesses operating the most efficiently environmentally will have fewer costs from permits to pass on and could become a more affordable supplier. As the scheme progresses, it will be vital that your business compares costs of various suppliers to ensure you are receiving good value.
Generally, businesses can expect that goods that are high emissions intensive to rise in price relatively more than goods that are low emissions intensive.
It is intended that fuel taxes will decrease if the price of fuel increases due to the CPRS on a cent for cent basis for the first three years. Heavy commercial vehicle users will also be assisted in this way for at least the first year. These measures of assistance have been proposed but are not finalised.
The Carbon Pollution Reduction Scheme is the Federal Government’s chosen policy to reduce the amount of greenhouse gas emissions from Australian businesses. The scheme is still in the draft stages but it is anticipated that more information will come to hand throughout 2009.
The MTA is running the Green Stamp Plus program in New South Wales and the Australian Capital Territory as a joint initiative with the Australian Government Department of Environment, Water, Heritage and the Arts. For more information please visit www.greenstamp.mtansw.com.au or call MTA on 02 9213 4222.
