Rpcon s105 the carbon tax impact on the retail industry - peter ramsay.ppt
The Carbon Tax and its Impact on the Retail IndustryRPCON 2012. Presented by Peter Ramsay What does it mean for my business?
The Carbon Tax-An Overview• 8 November 2011 Parliament passed the Clean Energy Act• Legislates the charging of a Carbon Tax• From 1 July 2012, large emitters are subject to the Tax• Price of emissions fixed at $23/tonne CO2-e for three years, then carbon emissions capped and price set by market
Who is liable for the carbon tax?• Direct emitters (on–site) > 25,000 tonnes per year• Approximately 500 companies in Australia are expected to be subject to the tax Waste Disposal (Landfills) Industrial Mining (not coal) Transport: rail, aviation, shipping, onsite transport (e.g. mining) Electricity Generators Natural gas suppliers
Retail Industry not directly taxed, BUT• Electricity generators will need to pay the carbon tax, and this cost will be passed on to consumers: higher electrical costs and/or higher rents• Transport Industry will pass on carbon tax to customers• Manufacturing Industry will pass on increases in manufacturing costs to customers• Entire supply chain will be impacted
• Myer has said it expects its costs to increase by up to $6M/year• Not so clear the impact on small businesses• An article in the Sydney Morning Herald March 17-18 quotes the case of Garden City Plastics - a Victorian manufacturer of recyclable garden pots is claimed to be facing a $120K/year increase in electrical costs. This can be recouped by increasing prices 0.24%.
What can you do to minimise your liability?• Reduce electricity costs by increasing energy efficiency• Reduce transport costs• Landlord lease agreements• Reduce waste• Government incentives and programs
Energy Efficiency• Consider installing LED lighting, and sensor lighting• Largest energy savings are in upgrading heating/cooling systems and refrigeration• Increase the energy efficiency of the building or move to a more energy efficient building(some cases see annual savings of $100K-$200K and payback within a year)
Energy Efficiency (continued)• Woolworths and Coles installed energy efficient lighting and refrigeration• Another retailer installed solar panels at a distribution centre.
Transport Costs• Trucking industry is exempt from the carbon tax until July 2014 – keep this in mind when negotiating long term transport contracts• Prudent to revisit service contracts for logistics operations
Rental Costs• Westfield, Stockland, Centro, AMD etc expect retailers to contribute to costs of air conditioning, cleaning and electricity in shopping centres: clauses in leases pass increased costs onto tenants• Talk/negotiate with the landlord regarding whether there are rewards for increasing energy efficiency• Negotiate having a “green lease”
Government Initiatives/programs• Businesses < 2M turnover per year: Instant asset threshold has been increased from $5k to 6.5k per year for depreciable assets• Investigate joining the City/Switch program• NSW: Energy Savings Certificates (ESCs) can be created by cutting energy use and then sold to electricity retailers (www.ess.nsw.gov.au)
Government Initiatives/programs• Small businesses (up to $40K/annum in electrical bills and <11 full time employees) are entitled to a 50% rebate on an energy assessment
Summary• Carbon tax starting 1 July 2012• Retail industry will not directly pay the carbon tax, but will be pay indirectly throughout entire supply chain.• Not clear what the impact will be, but it is prudent to investigate cost effective ways to reduce projected increased costs (e.g. energy efficiency, transport etc.)