Hot Topic
Today there were 2 hot topics - communication on climate change (the extroverted media performer?) and carbon accounting and measurement (the serious number cruncher?) – but completely entwined with the other. This was illustrated in today's launch of both the Carbon Disclosure Project ASX200 Leadership Indices and the CDP Australia and New Zealand Climate Change Report.
Indeed, as experience under the National Greenhouse and Energy Reporting System deepens, carbon accounting and measurement practices crystallise and access to public information on carbon performance of business explode, there is an ever increasing expectation on business to disclose and be held to account for carbon emissions policy and practice.
Key themes from Wednesday are:
- ensure, first and foremost, compliance with all legal carbon reporting and other obligations
- ensure carbon reporting and liability management is handled at the appropriate level within the business (note that deliberate errors in accounting may give rise to personal liability) and
- ensure, from the perspective of the fiduciary obligations to shareholders, that both the opportunities and the liabilities associated with increased carbon regulation are identified and pursued.
From the sessions
Understanding Australia's clean energy legislative package
- The Clean Energy Regulator (CER) is taking a pragmatic approach to compliance as business works through the early stages of the carbon price. The CER's door is open to discuss any issues as they arise with a view to finding a solution.
- The conversation for business to date has principally focussed on compliance issues with less consideration of investment opportunities – the latter being subject to the risk of repeal.
- Australia's carbon pricing mechanism (CPM) is being closely watched by a number of countries looking to implement similar schemes – the Australian CPM advances carbon market policy design.
Carbon decision making and risk management
- Liable entities should develop a common assessment framework to allow them to develop a portfolio approach to carbon purchasing.
- It is recommended that this framework should draw first upon existing skills within the organisation, particularly the skills that sit with the operational people.
- Additionally, the framework should have a senior person responsible for this project – a person in a position with autonomy to make decisions. This is very important in times of political and market uncertainty.
Emerging carbon economies in northern Australia
- A significant percentage of land in Australia is indigenous native title or land rights land. Indigenous peoples must be a major part of the story of Australian carbon emissions reductions going forward.
- As methodologies are developed and approved, the opportunities in Northern Australia under the Carbon Farming Initiative are significant, however bureaucratic delays in existing regulatory regimes will need to be overcome.
- Carbon projects in northern Australia can have significant benefits for indigenous employment and connection to country. This is both a core policy outcome of the CFI and a value add to the credits produced from projects.
Analysing and modelling carbon markets
- Only a few people tend to operate in the spot or short term carbon market.
- Very few people operate in the long term carbon market.
- Most business decisions are based on the medium term market (1 to 5 years).
- Australia will be a price taker from the EU market and the key policy decisions imminent in the EU market will significantly affect the price of carbon in Australia out to 2015 and beyond.
- A critical issue for Australia will be whether the secondary market is prepared to smooth out the significant injections of carbon in the market for Australian Auction rules.
Quote of the day
"I disagree that compliance payers will always take the cheaper CERs. Some buyers are equally concerned about qualitative aspects of carbon decision making"
Mark Meyrick, Eneco Energy Trade
Looking forward – Thursday, 8 November 2012
Today we will hear from:
- the Honourable Mr Mark Dreyfus QC MP, Parliamentary Secretary for Climate change and Energy Efficiency
- James Cameron, Chairman, Climate Change Capital
- Geoff Rousel, MD, Commodities, Carbon & Energy, Westpac
- Anna Skarbek, Board member, Clean Energy Finance Corporation.
This is in addition to our own Felicity Rourke and Anthony Hobley. Please stay tuned for an update on Thursday's activities that will be sent tomorrow morning.
Please come and meet our global climate change team who will be at our trade fair stand at Expo. We look forward to seeing you there.
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