How has business responded to the carbon price announcement

15 Jul 2011Archived News Climate Change Matters

Since the government's announcement of the carbon price, we have seen a number of statements made by highly impacted companies that are more measured than the rhetoric seen in the media to date.

Public statements about carbon impacts will be monitored

Much of the current activity in analysing the impact of the carbon price on businesses is focussed on cost impacts and protecting profits. However, it is also vital that high energy users ensure that their emissions data is thorough, robust and aligns with their financial systems and accounting methods, in order to be audit-quality.

With the ASX declaring that statements made as to the impact of carbon on business operations will be subject to monitoring, business must protect their reputation and ensure that they are not in breach of share market disclosure provisions which require accurate, verifiable statements.

In reviewing releases made to the Australian Stock Exchange (ASX) we can gauge the mood of key sectors across the Australian economy.

From our most highly impacted Australian business, BlueScope Steel, a media release stated that the government’s package was “a pragmatic solution to a complex problem” and that “..the STP (Steel Transformation Plan) materially reduces the overall cost of the carbon tax on BlueScope. It is a substantially better outcome than the CPRS scenario..” The media release also talked about other hurdles faced by the steel industry: “other macroeconomic challenges; including the high $A, high raw material costs, low domestic demand and low prices.”

OneSteel in its release to the ASX was similarly supportive of the Steel Transformation Plan.

Energetics has undertaken specific analysis of the carbon price impacts on the steel industry.

Click to read the analysis.

Taking a more cautious approach, Rio Tinto's 10 July 2011 release states: "Rio Tinto is disappointed with the Australia Government's carbon tax proposal, warning it will inevitability hinder investments and jobs growth in Australia without reducing global carbon emissions."

Rio Tinto is currently considering their response to the Government’s Clean Energy Future plan.

Adelaide Brighton, a producer of construction materials said: “In light of the impost of the proposed carbon tax and the high Australian dollar, Adelaide Brighton will continue to evaluate its domestic footprint compared to the potential enhancement of import flexibility”.

Virgin Blue emphasised that as a business they would not be able to absorb the $45 million additional cost created by the carbon tax, but that instead the cost would need to be passed on in full to customers. They stated: “Initial modelling indicates an average domestic fare increase per flight sector of approximately $3 which will vary depending on sector length.”

Grant King, Managing Director of Origin Energy and member of the business roundtable advising the government, stated in a media/ASX release: “Origin has consistently supported the view that an emissions trading scheme is the most effective way to reduce carbon emissions. The government's announcement ......strikes a reasonable balance between a carbon price high enough to bring about real progress in reducing carbon emissions and providing adequate safeguards for households who will pay the increases in costs necessary to bring about this change." 

Join the conversation