February 2008 - Carbon Markets Update
There has been a flurry of carbon markets activity since the federal election in November 2007. This newsletter provides a snapshot of the critical issues, particularly those issues where public submissions are being sought.
Kyoto Ratification & the Australian Emissions Trading Scheme
Australia has ratified the Kyoto Protocol, committing us to reduce our greenhouse gas emissions to 108% of 1990 levels in the period 2008-2012. As it is the responsibility of the Commonwealth Government to meet the target, they have committed to introducing an emissions trading scheme by 2010.
The emissions trading scheme will place a cap on the emissions allowed to be produced. Permits would then be issued (either freely or auctioned) up to the level of the cap. Each year, firms would surrender a number of permits equal to their emissions. Permits will be actively traded and will attract a price. Companies that can easily reduce emissions will avoid this cost, which frees up permits for those companies who have limited opportunities to reduce their emissions.
The ratification of the Kyoto Protocol opens the door to a range of international carbon trading opportunities for Australian businesses, and will link us to the multibillion dollar international carbon market. The design of the Australian Emissions Trading Scheme will set up parameters around international linking, particularly in the early stages of implementation.
National Greenhouse & Energy Reporting Act
The development of the regulatory framework that supports the National Greenhouse and Energy Reporting Act is continuing with the release of two papers, the Regulations Policy Paper and the Technical Guidelines for the Estimation of Greenhouse Emissions and Energy at Facility Level for Energy, Industrial Process and Waste Sectors in Australia.
The Technical Guidelines provide a framework to support the production of greenhouse gas emission inventories and energy data by organisations required to report under the Act. Submissions close on 13th February. For further information, you can read the attached “NGER Technical Guidelines”.
The Policy Paper details the approach for all areas to be covered by regulations and follows on from the discussion paper released last October. Submissions close on 27th February. For further information, you can visit the Department of Climate Change website to read the NGER Policy Paper or read the attached “NGER Policy Paper”.
Key points to note include:
- The operator of a facility will be taken to have operational control in preference to a facility owner;
- Corporations will be required to report data relating to all thresholds when at least one corporate group threshold is met by a corporation in a reporting year; and
- Due to the 2010 implementation date of the Australian Emissions Trading Scheme (AETS), the enforcement of compliance in the first reporting year (July 2008 – June 2009) is expected to be strict for corporations whose data will determine permit allocation or liability under the AETS. Punitive measures may be applied.
National Greenhouse Accounts Factors Workbook Released
The Department of Climate Change has released The National Greenhouse Accounts (NGA) Factors Workbook which replaces the AGO Factors & Methods Workbook.
The majority of the emission factors were taken from the Technical Guidelines for the Estimation of Greenhouse Emissions and Energy at Facility Level and have a general application to a broader range of greenhouse emissions inventories.
The Garnaut Climate Change Review (the Review) is an independent study by Professor Ross Garnaut, commissioned by Australia's State and Territory and Commonwealth Governments. The Review will examine the impacts of climate change on the Australian economy, and recommend medium to long-term policies and policy frameworks to improve the prospects for sustainable prosperity. It is expected that the findings of the review will be used to assist determining the emissions cap for the Australian Emissions Trading Scheme, due to start in 2010.
Interested organisations and individuals are invited to make a submission to the Review by Friday 4 April 2008. Submissions may address any key issues related to the Review and/or specifically the topics raised in various issues/discussion papers. Issues papers released to date are:
- Issues Paper 1: Land use - Agriculture and Forestry. (Submissions closed 18 January 2008.)
- Issues Paper 2: Financial Services for Managing Risk - Climate Change and Carbon Trading (Submissions due 21 February 2008.)
New papers to be released over February and March 2008 are:
- Research and development - Low emissions energy technologies (To be issued mid February 2008. Submissions due by 4 April 2008.)
- Transport and urban planning (To be issued late February 2008, following a public forum in Perth. Submissions due by 4 April 2008.)
- Climate Change: What is the science telling us? Is there a need for new emissions scenarios? (To be issued mid February 2008. Submissions due by 4 April 2008.)
- Emissions Trading Scheme Discussion Paper (To be issued early March 2008 with submissions due by 4 April 2008.)
The Review's final report is due on 30 September 2008, with a draft by 30 June 2008. For further information, you can visit the Garnaut Climate Change Review.
ACCC Investigates Carbon Offset Claims
Consumer concerns about understanding and verifying carbon offset claims have led the ACCC to consider the Trade Practices Act issues associated with carbon neutrality. The particular concerns the ACCC are focusing on include:
- Claims of carbon neutrality based on an inaccurate carbon footprint;
- Claims of carbon neutrality based on inappropriate offsets;
- Claims made without substantiation;
- Claims about a future transition to carbon neutrality; and
- Claims of low carbon products and services.
Energetics has been supporting clients gain Greenhouse FriendlyTM accreditation, the only government accredited program for achieving carbon neutrality. Energetics believes that this program has protected our clients from reputational risk due to the rigour around footprint calculation, offset creation and the independent verification process.
Energetics will be making a submission on the issues identified in the paper The Trade Practices Act and carbon offset claims. Submissions can be made orally or in writing by February 15, 2008.
For further information, you can read the attached “ACCC Discussion Paper”.