Media Release: what business is saying about the Coalition’s Direct Action plan

22 Aug 2013Archived News Energetics in the News

Representatives from a broad cross section of the Australian economy recently came together for a series of briefings on the Coalition’s Direct Action plan, led by carbon and energy management consultants Energetics.  Their feedback provides insights into business’ readiness to work with the programs emerging from the Direct Action plan should the Coalition be successful in the upcoming federal election.

While some participants had limited understanding of Direct Action and were adopting a ‘wait and see’ approach, a significant number had clear and insightful questions on behalf of their business.  Dr Peter Holt, head of Carbon Strategy at Energetics said, “We heard from businesses which have established sophisticated systems and processes for reporting, analysing and reducing emissions.  They do not want to re-invent the wheel.” 

Dr Holt went on to say, “Businesses want to know how Direct Action will complement existing federal and state schemes.  They want an economically efficient scheme that targets emissions reduction activities within Australia.”

Penalties should match the cost of abatement under Direct Action

Perhaps one of the most interesting findings came from a poll Energetics conducted in which 73% of participants indicated that they supported penalties being imposed on under-performing businesses that matched the cost of reducing emissions. (See chart below for percentage breakdown).  Currently, the Emissions Reduction Fund (ERF) outlined in the Direct Action plan only talks about rewarding emissions reduction activities. 

“This result suggests that business is prepared to accept appropriate penalties imposed for underperforming businesses, provided there is a level playing field,” Dr Holt says.

Support for renewables to meet our international obligations

In another key finding from Energetics’ polling, 51% supported renewables, 20% were in favour of energy efficiency measures and 19% supported a move from coal to gas powered electricity generation.  Bearing in mind that gas prices are expected to escalate on the east coast from 2015, reducing its use in the energy mix.   Only 9% were in favour of purchasing international carbon permits and 3% supported carbon sequestration in soil.  With 9% voting in favour of purchasing international permits, the result suggests a preference for offsets that work towards transforming our local economy.

Questions were also raised about the future of the Renewable Energy Target (RET).  Business wanted to know whether the RET will continue in its current form, whether it is Coalition policy to retain tradeable Renewable Energy Certificates, and whether support for solar from Small-scale Technology Certificates (STCs) would be abolished under Direct Action and if so, what mechanism would support small-scale generation.

Dr Holt said, “These questions from business are particularly interesting in light of Energetics’ recent analysis which showed changes in the way Australians use energy.  One of the most significant trends we’re seeing is the rapid growth in renewables, particularly solar PV, which is reshaping Australia’s energy mix.  This, and a number of other factors, has reduced the national emissions forecast to 2020.  The abatement challenge that Direct Action must work to achieve has been calculated to be 275 million tonnes CO2-e reduction by 2020, down from the 2012 government forecast of 786 million tonnes.” 

Questions raised and discussed:

  • Can Direct Action achieve emissions targets within the allocated funding arrangements, especially given ongoing Budgetary pressures? 

  • Concerns remain about the operation of the Emissions Reduction Fund.  Questions span five major areas:
    • Businesses report emissions under the current National Greenhouse and Energy Reporting scheme as a single entity, so how will a Direct Action baseline, drawn from the National Greenhouse and Energy Reporting (NGER) Act, account for different business activities?
    • The relationship between production and emissions levels is not always obvious. How would a baseline account for variations?
    • Business is not clear about how a reverse auction would work under the Emissions Reduction Fund. Concern was also expressed that some energy efficiency activities might be regarded as ‘business as usual’ and therefore not eligible.
    • How does business growth and expansion effect the calculation of emissions reduction baselines?  How would a baseline be established for a new entrant? Will this be based on an industry average?
    • Will the Clean Energy Regulator be able to validate enough methodologies to allow the ERF to begin operation of 1 July 2014? What measures will be in place to assist business to reduce emissions and improve efficiency in the interim? 

There was also discussion around the ability of Direct Action to respond to stronger targets if they eventuate from the next year’s international negotiations.

For further information and to arrange an interview, please contact Helen Wetherell, Communications Manager, 02 9929 3911.

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