SBC Overview on Carbon Management


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This presentation talks about the what, the why, and the how of managing carbon. It starts with climate change science and then moves on to Australia’s emission profile and how to reduce emissions. It gives an overview of the carbon pricing mechanism that has passed through both houses of parliament and how this affects companies. It will also give an overview on carbon accounting and carbon management/reduction.

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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, climate change, global warming greenhouse effect, clean energy bill, carbon accounting, carbon footprinting, carbon managementDescription:This presentation talks about the what, the why, and the how of managing carbon. It starts with climate change science and then moves on to Australia’s emission profile and how to reduce emissions. It gives an overview of the carbon pricing mechanism that has passed through both houses of parliament and how this affects companies. It will also give an overview on carbon accounting and carbon management/reduction.
  • Source:
  • The width of each column depicts population and the height depicts per capita emissions, so the area represents total emissionsWorld population estimated at 7 billion
  • Adding to the pressure for Australia to act is the possibility that countries will start to erect trade barriers against its high-emission products. A lower-emission economy is already starting to grow across the world, in which inaction is leaving Australia ill-equipped to compete.While Australia does have an operational emission trading system in NSW and the ACT, state and federal governments have implemented many other policies aimed at driving clean energy investment. For example, households installing solar panels in Victoria, SA, Queensland and the ACT all receive a guaranteed high price for any power sold. These policies may be justified on other grounds such as industry development, but they aren’t the most cost effective at reducing carbon pollution.As the report Putting a price tag on pollution shows, the subsidies given to solar power are equivalent to a price of hundreds of dollars a tonne. This means that we are paying households in the ACT nearly US$400 to save a tonne of pollution, while potentially giving up the chance to reduce a tonne through the NSW emissions trading system at a cost of US$6.Policies which cover a larger share of overall generation will generally provide the largest aggregate incentive. Policies covering the entire generation sector, such as an emissions trading scheme or renewable portfolio standard, often have a larger impact (and often at a lower cost) than policies with more limited scope.
  • From 2015 to 2018: The floor price will be $15The ceiling price will be $20 above the anticipated international price
  • will be a floor and a ceiling limit for CERs.Australian companies covered by the country's emissions trading scheme could be forced to pay extra fees to the government for the purchase of international offset credits if market prices remain at current low levels.In the first three years of its trading scheme, starting July 1, 2015, Australia will have in place a minimum price of A$15 ($16.46) that emitters must pay for domestic and international permits surrendered to the government.The provision has been proposed by the Labor government as a measure to avoid a price collapse when Australia moves to a flexible carbon price in mid-2015 from a tax on emissions.But U.N.-issued certified emissions reductions (CERs) closed in the European market on Monday at 8.95 euros CEREZc1, which corresponds to A$11.64, well below the intended price floor.Any Australian firm buying a CER at today's market price to use for future compliance would have to pay an additional A$3.36 to the government.Companies paying less than A$15 for their CERs or other international units would need to pay a top-up fee to the government to make up the difference, Harris said."The top-up fee only applies to credits bought for compliance," she said, meaning CERs traded on a speculative basis would not be subject to the fee.Australia plans to put in place similar quality restrictions on CERs as the European Union, meaning nuclear and industrial gas destruction projects will be ruled out.
  • Cost curve: Example an analysis to assist with the selection of the most cost effective emission reduction options.
  • SBC Overview on Carbon Management

    1. 1. Managing Carbon The what, the why and the how Sustainable Business Consulting Pty Ltd Level 32, 101 Miller Street, North Sydney 2060 P: 1300 102 195 | F: +61 2 8079 6101Preferred provider for the NSW Government ACN 140 233 932 | ABN 46 506 219 241
    2. 2. Agenda Climate change and global warming International drivers – government action Australia’s emission profile Basic insights into the carbon pricing mechanism Impact to companies Opportunities for companies Carbon accounting/footprinting Carbon reduction/management23 November 2011 | 2
    3. 3. Climate Change and Global Warming The Science and The Effects
    4. 4. The Greenhouse Effect: Natural and Enhanced Source: November 2011 | 4
    5. 5. Carbon Lifecycle and Demonstration Carbon is everywhereDiamonds, sugar, wood, petrol, coal, plastic, graphite, carbon dioxide, methane, meat and alcohol
    6. 6. The Global Carbon Cycle23 November 2011 | 7
    7. 7. Government Response Increasing Regulations and Incentives
    8. 8. Implemented and Planned Climate Change Action23 November 2011 | 9
    9. 9. Australias Reaction Renewable Energy Target (20% by 2020) NGER Act EEO Act NABERS ratings State GHG legislation Discussion about sequestration technologies (e.g., CCS) Energy efficiency (move to national standards for buildings, electrical goods, machinery, plant equipment & whitegoods) Several state and federal subsidies for sustainability projects (Sustainability advantage), clean energy (feed-in tariffs), etc. Green skilling the workforce AND: … A price on carbon from 1 July 2012!23 November 2011 | 10
    10. 10. Existing Greenhouse Gas Legislation: NGERS23 November 2011 | 11
    11. 11. Basic Insights into theCarbon Pricing Mechanism
    12. 12. 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 November 2011 | 13
    13. 13. Australia’s Emissions Intensity top emitter per capita Source: Garnaut Climate Change Review Update 2011, Update Paper 223 November 2011 | 14
    14. 14. The Big Threat: China and India Following our Path23 November 2011 | 15
    15. 15. Australia’s projected growth in emissions Source: Treasury modelling, 2011(medium global action scenario); graphic taken from Clean_Energy_Future_Final.pdf from November 2011 | 16
    16. 16. Ways to Achieve Emission Reduction: These two will be implemented, starting in 2012 Tax ETS Direct action • Direct, fixed • Direct, • Indirect price price on floating price on carbon carbon on carbon • Government • Market based • Market based controls the approach approach abatement Cap-and-trade Feed-in tariff Subsidies Renewable Energy Target23 November 2011 | 17
    17. 17. Economic Efficiency of Policies Economic Efficiency of Policies US$/tonne of C02-e abated $200.00 $190.00 $180.00 $160.00 $150.00 $140.00 $120.00 $100.00 $100.00 $80.00 $60.00 $40.00 $40.00 $20.00 $10.00 $- Direct price tag (emissions trading, energy targets Clean taxing) Lower emission fossil fuel mandates Feed in tariffs (wind, biomass, solar) Clean energy subsidies23 November 2011 | 18
    18. 18. The Marginal Abatement Cost Curve23 November 2011 | 19
    19. 19. 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 A B Avoid or reduce Pay the price emissions • Pay the tax or pay for • Cheapest way to the permit avoid • Pay for credits • Cheapest way to reduce As each company behaves similarly…. … the least costly abatement measures are adopted Australia-wide23 November 2011 | 20
    20. 20. 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 Carbon Tax ETS Price is Price is fixed variable No cap on Cap on emissions emissions23 November 2011 | 21
    21. 21. Who are the biggest polluters in Australia? Source: AFR July 16-17, 201123 November 2011 | 22
    22. 22. How does the carbon pricing work, video Video, source: November 2011 | 23
    23. 23. Important Dates for the Carbon Pricing 1 July 2012: Start carbon tax $23 $30 $25 1 July 2013: CPI increase $24.15 $20 $15 1 July 2014: CPI increase $25.40 $10 $5 $0 2011 2012 2013 2014 1 July 2015: price will be floating (Cap-and-trade emissions trading scheme) 40 30 20 10 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 202223 November 2011 | 24
    24. 24. International Linkage Fixed Price * ETS 2015 Use of international International emissions emissions units will not be units will be accepted allowed International permits will Kyoto compliant credits be allowed to offset an from the CFI (ACCU) will be entity’s carbon liability eligible for compliance with a 50% limit until 2020 purposes – limited to 5% Kyoto compliant credits from the CFI (ACCU) will be eligible for compliance purposes – no limit Significant opportunity for the land use and agricultural sectors23 November 2011 | 25
    25. 25. How Does the CarbonPrice Impact Companies?
    26. 26. Impact for Large Emitters Need to understand their own emissions – potential carbon liability Need to understand the emissions of their suppliers – price pass through Can companies accurately and reliably measure their current and forecasted emissions? How much of the carbon cost can they pass on? Need to assess new and existing investments in terms of the carbon tax Need to put governance processes in place to be able to deal with the 1 July 2012 start date Is the company eligible for government assistance?23 November 2011 | 27
    27. 27. Impact for Small to Medium Sized companies No direct liability to pay the price on carbon SMEs need a basic understanding of their emissions – are they under the threshold for direct carbon tax liability? SMEs need to understand the emissions of their suppliers – how energy intensive are the products they are buying? How much of the carbon cost that suppliers pass on to the company can be passed on to customers? What proportion of the carbon footprint is electricity and natural gas? Is the company eligible for government assistance? Tax change: Small businesses can immediately write off capital purchases to $6,500 Small businesses eligible to access a $240m fund to reduce energy consumption23 November 2011 | 28
    28. 28. Opportunities for Companies
    29. 29. 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 BHP23 November 2011 | 30
    30. 30. New Opportunities Ability for land owners to generate carbon offsets under the CFI Energy-efficiency products and services will be in higher demand Carbon management products and services will be in higher demand Consumers may shift towards low-emission products, because such products become more cost-competitive Renewable energy projects will receive funding Companies that reduce their carbon footprint will have a better competitive standing23 November 2011 | 31
    31. 31. Summary of Drivers for Carbon Management
    32. 32. Drivers for Carbon Management COMPLIANCE driver – NGER reporting Legal tax avoidance through carbon management Risk management – the cost of carbon will be passed through Supply chain pressures Enhance reputation Product differentiation To generate offsets (carbon credits) To reduce costs23 November 2011 | 33
    33. 33. Carbon Accounting
    34. 34. The Unit of Measurement: CO2-e HFCs N2O CO2 PFCs CH4 SF6 CO2-e23 November 2011 | 35
    35. 35. Sulphur Hexafluoride23 November 2011 | 36
    36. 36. Scopes Source: November 2011 | 37
    37. 37. Carbon Footprinting Process Define Boundaries Temporal, geographic, organis ational, operational Emission Sources Direct and indirect sources Scopes 1 and 2 are essential, 3 is optional Inclusions Exclusions Materiality Collect Data time-consuming Calculate Footprint Easy once you have the data23 November 2011 | 38
    38. 38. 23 November 2011 | 39
    39. 39. Example Carbon Inventory for a Small Services Firm23 November 2011 | 40
    40. 40. Example Inventory (Education Sector): Emissions by Scope Total Scope 3 Emissions 31% Total Scope 2 Emissions 61% Total Scope 1 Emissions 8% Total emissions: 29,533 t CO2-e23 November 2011 | 41
    41. 41. Example Inventory (Education Sector): Emissions by Source tCO2-e Scope 1 Scope 2 Scope 3 25,000 20,000 15,000 10,000 5,000 0 Solid Fuels Gaseous Fuels Liquid Fuels Purchased Transport Staff Taxi Travel Business Solid Waste Biological Paper Refrigerants Electricity Fuels Commute Travel treatment of Consumption solid waste23 November 2011 | 42
    42. 42. Example Inventory (Education Sector): Emissions by Source Transport Fuels 0% Business Travel 0% Solid Waste 17% Paper Consumption 3% Purchased Electricity 73% Refrigerants 7% Gaseous Fuels 0% Total emissions: 29,533 t CO2-e23 November 2011 | 43
    43. 43. Carbon Management
    44. 44. It Makes Good Business Sense Graphic reproduced from, working 9-5 on climate change23 November 2011 | 45
    45. 45. Carbon Management Hierarchy Source: November 2011 | 46
    46. 46. Emission reduction opportunities23 November 2011 | 47 47
    47. 47. Thanks For Attending This Presentation Sustainable Business Consulting We are happy to help you further with your Carbon Management needs23 November 2011 | 48
    48. 48. Australia’s Electricity Prices in Comparison Source: Department of Resources Energy and Tourism: Energy in Australia 201023 November 2011 | 49