SBC Carbon Price 2011 07 28
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This presentation gives an overview of the carbon pricing mechanism that has been announced by the Australian government. It talks about Australia’s pollution profile and emissions, the expected ...

This presentation gives an overview of the carbon pricing mechanism that has been announced by the Australian government. It talks about Australia’s pollution profile and emissions, the expected changes with a price on carbon, carbon tax versus emissions trading schemes, how the carbon price will work, the biggest polluters in Australia, the changes that will be implemented, the carbon pricing mechanism explained and the impact for companies.

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  • Tags:Carbon Tax, Carbon Price, ETS, CPRS, Clean Energy Future, price on carbon pollution, NGER, price on carbon, carbon pricing mechanism, coverage carbon taxDescription:This presentation gives an overview of the carbon pricing mechanism that has been announced by the Australian government. It talks about Australia’s pollution profile and emissions, the expected changes with a price on carbon, carbon tax versus emissions trading schemes, how the carbon price will work, the biggest polluters in Australia, the changes that will be implemented, the carbon pricing mechanism explained and the impact for companies.
  • http://www.carbontax.org/progress/where-carbon-is-taxed/http://www.economist.com/node/18989175
  • http://ht.ly/5KCsU
  • http://www.climatechange.gov.au/en/government/international/global-action-facts-and-fiction/cc-countries-acting-now.aspx
  • http://www.cpaaustralia.com.au/cps/rde/xchg/cpa-site/hs.xsl/knowledge-esg-toolkit-guides-climate-assistance-EITE-industries.html

SBC Carbon Price 2011 07 28 Presentation Transcript

  • 1. The Clean Energy Future A Price on Carbon Pollution
    28 July 2011
    Sustainable Business Consulting Pty Ltd
    Level 32, 101 Miller Street, North Sydney 2060
    P: 1300 102 195 | F: +61 2 8079 6101
    www.sustainablebizconsulting.com.au 
    ACN 140 233 932 | ABN 46 506 219 241
    Preferred provider for the NSW Government
  • 2. Agenda
    Australia’s pollution profile and emissions
    Expected changes with a price on carbon
    Carbon tax versus an Emissions Trading Scheme
    How does the carbon price work
    Biggest polluters in Australia
    Changes that will be implemented
    The carbon pricing mechanism explained
    Impact for companies
  • 3. Australia’s pollution profile
    Source: 2009 emissions from the National Greenhouse Gas Inventory 2011, DCCEE analysis; graphic taken from Clean_Energy_Future_Final.pdf from www.cleanenergyfuture.gov.au
  • 4. Australia’s projected growth in emissions
    Source: Treasury modelling, 2011(medium global action scenario); graphic taken from Clean_Energy_Future_Final.pdf from www.cleanenergyfuture.gov.au
  • 5. How can Australia reach the carbon reduction target?
  • 6. Ways to achieve emission reduction:
    Current proposed
    solution
    Feed-in tariff
    Subsidies
    Renewable Energy Target
    Cap-and-trade
  • 7. When things get more expensive, we will start looking for cheaper alternatives
  • 8. The basics of a market-based carbon pricing approach
    A company is faced with a price on carbon
    It will now decide whether it is cheaper to
    As each company behaves similarly….
    … the least costly abatement measures are adopted Australia-wide
    A
    B
  • 9. Expected changes with a price on carbon
    Switch to more gas-fired electricity generation(less emissions-intensive than coal)
    Switch to renewableelectricity generation (as coal is made more expensive the relative price of renewables will come down)
    Coal-fired boilers converted to gas-fired boilers in manufacturing plants, commercial buildings and hospitals
    Energy-efficient buildings more attractive to tenants
    Incentive for households and businesses to use energy more wisely
    Innovationin technology to reduce pollution from existing processes
    Chemical plants to install scrubbers to reduce nitrous oxide emissions
    Installation of more efficient motors in industry
    Capture and use or flaring of emissions from mining and gas extraction
  • 10. Carbon Tax versus the ETS
    Carbon Tax:
    Fixed price of $23 / t of CO2-e
    Unlimited number of permits available for purchase during fixed price period
  • 11. Australia is not an early mover with pricing carbon
  • 12. Where else is carbon taxed?
    Finland: enacted carbon tax in 1990 (first country to do so)
    Sweden: enacted carbon tax in 1991
    Great Britain: ‘climate change levy’ in 2001
    Boulder, Colorado: implemented USA’s 1st tax on carbon emissions in 2007
    Quebec: first North American state to charge a carbon tax on hydrocarbons (petroleum, natural gas and coal)
    British Columbia: enacted carbon tax in 2008
    ‘At C$25 per tonne, British Columbia’s tax already exceeds the price of carbon in Europe’s emissions-trading scheme. But it is still too low to prompt radical changes in behaviour: it adds just five cents to the price of a litre of petrol. Getting the most energy-intensive industries to make big cuts might take a tax four times as high. Even so, British Columbia has shown the rest of Canada, a country with high carbon emissions per head, that a carbon tax can achieve multiple benefits at minimal cost.’ The Economist, 21 July 2011
  • 13. What countries have got an Emissions Trading Scheme?
    (NSW – first ETS ever: 2003)
    New Zealand: since 2010
    European Union: since 2005
    China is piloting ETS in several provinces and will introduce a nation-wide ETS in 2017
    Japan to launch ETS in 2013
    South Korea is preparing for an ETS
    Picture source: ABC News, 22 July 2011
  • 14. Implemented and planned climate change action
  • 15. How does the proposed carbon pricing work?
    Source: http://www.abc.net.au/news/events/climate-change/carbon-pricing-explained.htm
  • 16. How does the proposed carbon pricing work, video
    Video, source: http://www.youtube.com/watch?v=fQd_DlkdQ1w&feature=player_embedded
  • 17. Who are the biggest polluters in Australia?
    Source: AFR July 16-17, 2011
  • 18. Carbon cost and assistance for the big polluters
    $580m cost in first year
    Source: AFR July 23-24, 2011
  • 19. Main sectors and companies impacted by the carbon price
    SteelBlueScope and OneSteel
    Oil and gasWoodside, Santos, Origin
    MiningBHP Billiton, Rio Tinto, Iluka, Newcrest
    ConstructionBoral, James Hardie
    TransportAsciano, QR National
    Commercial and RetailDexus Property Group, GPT
  • 20. What is proposed?
    ‘The Clean Energy Future’
  • 21. Implemented Changes
    Climate Change Authority Independent body, to distance emission reduction target setting from political influence, Bernie Fraser to head CCA
    New long-term emission reduction target of – 80% by 2050 on 2000 levels (used to be -60%)
    Tax reform (some recommendations of the Henry Tax Review were adopted)
  • 22. Four key elements
  • 23. Dates
    1 July 2012: Start for carbon tax
    1 July 2013: CPI increase (plus 2.5%)
    1 July 2014: CPI increase (plus 2.5%)
    1 July 2015: price will be floating (Cap-and-trade emissions trading scheme)
  • 24. Coverage of carbon tax – facilities and gases
    Thresholds
    Facilities with scope 1 emissions greater than 25kt CO2-e
    10kt of CO2-e for some landfill facilities
    ~500 companies (60% of Australia’s emission profile)(Under the CPRS this would have been the 1000 largest polluters)
    Gases covered: Carbon dioxide, methane, nitrous oxide, PFCs (aluminium production)
    HFCs and sulphur hexafluoride: equivalent carbon price through the existing synthetic greenhouse gas legislation
    Gases
  • 25. Coverage of carbon tax – sectors
    Sectors
    Stationary energy
    Industrial processes
    Fugitive processes (other than decommissioned coal mines)
    Non-legacy waste
    Rail
    Domestic aviation and shipping
    Agriculture and land-use sectors are excluded
  • 26. Treatment of transport fuels
    Road transport is initially exempt
    Included transport fuel uses:
    domestic aviation
    domestic shipping
    rail and non transport uses of fuel (e.g. diesel generators)
    Heavyroadtransport is expected to be included from 1 July 2014
    Excluded transport fuel uses:
    Households
    Light vehicles in business (< 4.5t GVM)
    Off-road by the following industries
    Farming
    Fisheries
    Forestry
  • 27. The linkage to the NGER Act
    The carbon tax only covers scope 1 emissions over 25 kt, and only for certain sectors. There is no energy consumption/production threshold with the carbon tax
    NGERS is broader in scope than the carbon tax
    Covers all sectors
  • 28. On the NGER Act: new NGER threshold applies
    Your organisation is liable to report under NGERS if you:
    Consumed 25,000 MWh of electricity
    Burnt 2.5 million litres of fuel
    Emitted 25kt of CO2-e
    That would fall under the carbon tax regime, but only for scope 1 emissions (excluding emissions from transport fuels and excluding HFCs and SF6)
    Source: AFR July 16-17, 2011
  • 29. International Linkage
    *
    2015
    Fixed Price
    ETS
    Use of international emissions units will not be allowed
    Kyoto compliant credits from the CFI (ACCU) will be eligible for compliance purposes – limited to 5%
    International emissions units will be accepted
    International permits will be allowed to offset an entity’s carbon liability with a 50% limit until 2020
    Kyoto compliant credits from the CFI (ACCU) will be eligible for compliance purposes – no limit
    Significant opportunity
    for the land use and agricultural sectors
  • 30. Industry and Household Assistance
    $9.2 billion for industry
    EITEs (see next slide) will receive 94.5% assistance
    Special assistance for the coal, electricity, LNG and steel sectors
    Small businesses eligible to access a $240m fund to reduce energy consumption
    Small businesses can immediately write off capital purchases to $6,500
    More than 50% of scheme revenue towards household assistance (tax cuts and/or benefit payments)
    Treasury modelling indicates that the average cost to households will be $9.90 per week, with compensation to be $10.10 per week (NOT revenue neutral)
  • 31. EITEs – Emissions intensive trade-exposed industries
  • 32. The new situation for EITEs
    94.5% compensation guaranteed for 5 years
    3 year notice for period for changes that can overlap with the initial 5 year guarantee
    Industries will need to provide evidence that they are losing competitiveness
    The Productivity Commission will oversee EITE compensation, including how much industries are cutting their emissions and what carbon price their international competitors are facing
    EITEs need to start innovating now to become cleaner and more efficient to avoid losing competitiveness
  • 33. Economic Impact
    Treasury modelling indicates
    economy will continue to grow
    Impact on employment negligible
    Scheme budgeted to cost $4.3 billion over four years
    Tax-free threshold will increase from $6,000 to $18,200
    Income tax cuts for all earning less than $80,000
    Benefits payment for single income households earning up to $150,000
    Prices for most household purchases will barely be affected by the carbon price
    http://www.abc.net.au/news/events/climate-change/carbon-pricing-explained.htm
  • 34. New Institutions
    ARENA (Australian Renewable Energy Agency)will consolidate renewable technology support measures
    Biodiversity Fund$946m to manage biodiverse carbon stores
    Carbon Farming Initiative (CFI)
    Clean Energy Finance Corporation (CFEC) – CCS is not included here
    Clean Energy Regulator (CER) – brings together the NGERS, RET, and CFI from July 2012
    Climate Change Authority (CCA) – will provide independent advice to government (progress on emissions reduction targets, recommended pollution caps, voluntary action, etc.)
    Energy Security Fund (ESF) – will fund the closure of emissions-intensive power plants
  • 35. The carbon pricing mechanism’s governance structure
  • 36. Carbon Farming Initiative
    Landholders will be able to create Australian Carbon Credit Units (ACCU) by undertaking activities which comply with the Kyoto protocol
    Activities include:
    Reforestation
    Avoided deforestation
    Controlled savannah burning
    Reducing livestock methane emissions
    Reducing emissions from fertiliser use
    Innovations such as biochar, biofuels and new species will be supported
    Tax breaks for conservation tillage equipment will also apply
    Farmers will be rewarded for biodiversity improvements. There will be regulations to determine the ACCU potential of tree planting projects
  • 37. What does all this mean for your organisation?
    Impact to your company
  • 38. Risk or Opportunity?
    Some of the most carbon intensive industries have seen the writing on the wall and are pouring billions of dollars into renewable energy
    “A carbon tax provides business with the certainty they need to continue trading in a modern economy, while creating a revenue stream that can be directed at investment into supporting other industries that are crying out for assistance, such as the renewable energy sector, an area of growth which has the potential to create thousands of jobs in this country.”
    Marius Kloppers, CEO BHP
  • 39. Impact for companies
    Understand your own emissions – potential cost impact
    Understand the emissions of your suppliers – price pass through
    Can you accurately and reliably measure your current and forecasted emissions?
    How much of the carbon cost can you pass on?
    Assess new and existing investments in terms of the carbon tax
    Put governance processes in place to be able to deal with the 1 July 2012 start date
    Is your company eligible for government assistance?
    Are there any new market opportunities for your company?
    Smart businesses will make adjustments early
  • 40. Thanks For Attending This Presentation
    Sustainable Business Consulting
    We are happy to help you further with your
    Carbon Management needs