The Australian government plans to introduce a carbon price by July 2012, starting as a fixed price before transitioning to an emissions trading scheme, to incentivize businesses to reduce greenhouse gas emissions and help Australia transition to a low-carbon economy. The carbon price will initially affect large polluting sectors but details are still pending on how it will be applied to businesses and how consumers and low-income households will be compensated. RSM Bird Cameron recommends businesses assess their carbon exposure and reduction strategies in preparation for the carbon price.

1. Chartered Accountants
March 2011
Update: Carbon and Sustainability
Risk Management Services
The Carbon debate is Carbon Price Mechanism agricultural emissions would be excluded
from the carbon pricing mechanism, and
picking up pace again Strategy that a phased approach may be adopted
in relation to different sectors. So far,
with the announcement The Multi-Party Climate Change
sectors included in the Carbon pricing
Committee (Government, Green and
that a carbon price Independents) has just announced its mechanism would be:
would be introduced in high level strategy to introduce a carbon
price in the Australian economy by July
• Energy
Australia by 2012. 2012. • Transport
• Industrial Processes
RSM Bird Cameron urges medium and Benjamine Lahousse, of
small businesses to get prepared for RSM Bird Cameron Risk • Fugitive Emissions (coal seam gas)
the introduction of a carbon price in the
Australian economy and initiate moves Management Carbon & • Emissions from non-legacy waste.
to understand their carbon exposure. Sustainability Services says There is still a lot of uncertainty linked to
Questions businesses ought to ask “When a carbon price is finally the details of the plan. The Government
themselves are: introduced in the Australian still have to provide details of whether
and how much affected businesses will
• What risks does the organisation economy, greenhouse gas be assisted to transition to a low carbon
run by ignoring existing and future emissions will translate into economy. Nor is it known how low income
carbon emissions regulations?
real costs for Australian households will be compensated if
• Do we understand our carbon businesses.” carbon prices are ultimately passed on by
footprint? How much energy do we business in consumer prices. It is also not
consume? How much greenhouse The strategy specifies that a fixed carbon known how climate change programs will
gas do we produce? price would start on July 1, 2012, before be funded.
• What is our carbon reduction moving to a market based solution and a This plan is meant to initiate behavioural
strategy? cap-and-trade emissions trading scheme changes and instil additional certainty
with a flexible price linked to international on the long term solution – the ETS -
• How will additional carbon markets and a 2020 carbon reduction
emissions regulations - in particular enabling carbon pricing in Australia.
target within three to five years.
the introduction of a carbon price
- impact our financial bottom line The aim is to put a price on carbon “The carbon price will firstly
and our accounting and reporting pollution to incentivise large emitting
companies to reduce their emissions, and affect big polluters which will
practices?
to enable Australia to shift towards a low most likely transfer extra costs
• Will our stakeholers demand more carbon economy. onto consumers. Products and
transparency on your actions to
reduce carbon emissions? It has already been confirmed that services which are made from

2. relatively less polluting material committee, which could range from 5 to your investors, regulators and
will become cheaper in relation to 20% reduction below 1990 level by 2020. stakeholders’ confidence.”
This emissions target will then translated
products which are made through into a set number of carbon permits
processes that incur more carbon RSM Bird Cameron is the largest mid-tier
which will give permission to the owner
accounting firm in Australia and offer a full
pollution.” to emit 1 tonne of greenhouse gas in
range of specialist advisory services, including
the following year. The total amount of
business consulting and advisory, assurance
The strategy has provisions for consumers’ permit will decrease over time and supply
and advisory, taxation consulting, corporate
compensation which will in theory enable and demand will ultimately determine
consulting and turnaround and insolvency.
consumers to use this additional purchase the carbon price. The higher the price,
RSM Bird Cameron is a core member firm of
power to opt for less polluting products and the higher the incentives are to redirect
RSM International, the sixth largest network of
realise behavioural changes. This mechanism investment to low carbon technologies and
independent accounting and consulting firms
will drive innovation and make greener and solutions.
in the world.
more innovative products more accessible for The more Australia continues to generate
consumers. We have experience in working with clients on
additional carbon emissions, the higher
specific emissions, energy and environmental
the carbon price and the more expensive
risk management assignments, including
What does it mean for you? reduction strategies will become. This is
corporate, large public departments, local
why businesses have a real incentive to
councils, and universities.
The committee has not provided details on start accounting for carbon now rather
than later. As it is already the case in other
how the carbon tax is going to be applied to
regions of the world, including Europe
On Watch
businesses operating in affected sectors. and China, Australia will ultimately have a In November 2010, Pr Garnaut was
carbon reduction mechanism in place. commissioned to provide an update to the
“Rather than imposing a carbon tax 2008 Review for the Australian Government
across the board, it would be fair How can we help? and community.
to develop a progressive taxation Whether your organisation goal is The Garnaut Climate Change Review—Update
system with thresholds that would to prepare for future environmental 2011 will release a series of papers between
regulations, comply with existing legislative February and March addressing developments
consider the relative carbon across a range of subjects including climate
requirements or report under voluntary
efficiency of business operations.” reporting commitments, RSM Bird Cameron’s change science and impacts, international
specialised services will help you find ways mitigation progress, land, carbon pricing,
Anyhow, a fixed carbon price will have the technology, and the electricity sector. A final
to effectively improve the carbon and
benefit to bring certainty to businesses so report is to be presented to the Government by
sustainability reporting procedures, systems
they can factor carbon prices in forecasts and 31 May 2011.
and internal controls of your organisation.
decision making tools used to evaluate potential
future investments. It will be beneficial for the RSM Bird Cameron can help at various
Australian economy if the fixed price period is levels including identifying carbon data For more information:
limited to a few years. As other schemes are sources, establishing new processes for data
already in place internationally, the Australian gathering and raising awareness of senior Sydney
carbon market should align naturally with management for carbon emissions and Benjamine Lahousse, Manager
foreign carbon markets. energy management. Email: benjamine.lahousse@rsmi.com.au
Our team of registered Greenhouse and T: + 61 2 9233 8933
“It is ultimately the markets and not Energy auditors and certified ISO 14001
the Australian government which will Lead Environmental auditors are able to
provide clients with advisory and assurance Melbourne
be more efficient at pricing carbon as services on their greenhouse and energy Tim Pittaway, Principal
an international commodity.” data collection, calculation and reporting Email: tim.pittaway@rsmi.com.au
processes.
With the flexible price mechanism, the T: + 61 3 9286 1800
government will be setting a cap on carbon
“We provide you with independent
emissions over a certain period of time.
The cap also has to be determined by the and objective expertise and
assurance that will bolster
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© 2011 RSM Bird Cameron