Take a stand

01 Feb 2010Archived News Energetics in the News

PUBLISHED: BRW Magazine by Anthony Sibillin, David Mitchell, Principal Consultant, Energetics Pty Ltd, talks about whether companies try to pre-empt green regulation? There are risks in both acting and waiting.

Business owners have long been warned to pre-empt the threat of governments declaring war on environmentally unsound operations.

By reducing their own carbon footprint, owners can choose the moment and pace at which they root out unsound practices, say the swelling ranks of green consultants.

And when the blitzkrieg of environmental regulation does being, they add, those who have already complied can race ahead of their non-compliant rivals.

However, the dangers of a pre-emptive approach to the environment have been highlighted by two recent events – the defeat of the federal government’s carbon pollution reduction scheme on December 2, followed two weeks later by the Copenhagen climate conference’s failure to set emissions targets.

These events demonstrate the financial risk in moving early in anticipation of regulations that might never materialize.

But some insist those laws and agreements are still on the way. Geoff Alexander, aggregation director at Sydney company COzero, which sells green power and carbon offsets to businesses, concedes that the delay makes it harder for climate change to get the attention of busy small and medium enterprise owners.

“But I do say to them – there will be a carbon price. It is the best way to deal with this problem [of climate change],” he says.

And there are solid business reasons other than pre-empting government regulation for reducing carbon emissions, water use, printing and other environmental sins, Alexander says.

One is the credibility it gives small businesses in the eyes of both customers and staff.

Australians spent almost $20 billion on healthier and sustainable products in 2009 – a market that researcher Mobius Group expects to grow to $27 billion by 2011.

Small business owner Tammy Halter can attest to the morale-boosting power that going green has on staff. For several years, Halter’s Brisbane company, Absolute Data Group, has expense. Last year, the defence and aerospace software specialist began sourcing 20 per cent of its electricity from renewables.

Halter says the initiatives enjoy the enthusiastic backing of her 10 staff, several of whom have switched their own homes to green power.

“The things that we’re done are not dramatic costs,” she says. “You do it because it is the right thing to do – full stop.”

Jim Bahr, the director of Sydney company VictorsFood, which runs cooking classes and tours, agrees.

“Let’s remember that to the extent we all support and buy from the big emitters, we are all culpable,” he says. “Subsequently, we all need to bear a bit of extra cost; the notion of saving a few cents now by polluting and paying for it later has brought us to breaking point – there is now more future to trade off.

“We need to act now and work towards reducing our emissions and paying for what we can’t reduce; this will provide the engine of the market the fuel it needs to incentivise change,” Bahr says.

For the less altruistically minded, federal and state governments are already doling out cash to incentivise small businesses to undergo a green makeover (see table below).

BRW Table

Small and medium manufacturers in Queensland and elsewhere can apply for grants of between $10,000 and $500,000 to meet up to half the cost of measures that cut their energy or water use under the federal government’s Retooling for Climate Change program.

Inducements aside, energy and water are costs that owners and managers should already be doing everything they can to reduce, COzero’s Alexander says.

“there is definitely room to do energy efficiency so that you can turn the savings into either purchasing green power or going to the bottom line,” he says.

“You can show you are making a difference to the accountant. It doesn’t have to be all airy-fairy stuff.”

And there’s nothing airy-fairy about the sharp jump in electricity prices expected between 2009-10 and 2010-11.

SMEs in Queensland (up 25 per cent) and New South Wales (up to almost 20 per cent) will be hit hardest, but all will pay substantially more for electricity over the next few years.

Alarmingly, these network price increases are in addition to any future rises from the federal government’s renewable energy targets or proposed carbon pollution reduction scheme (CPRS), notes Energetics, a climate change consultancy.

Energetics’ principal consultant David Mitchell adds that, for some SMEs, accounting for their environmental footprint has already passed from voluntary to compulsory.

Under the national greenhouse and energy reporting system (NGERs), big emitters must tell the government how much carbon they released in the previous financial year – including the emissions of on-site contractors.

Mitchell says any SME performing a service that emits carbon at the site of an NGERS – regulated customer should be recording these emissions already.

Those involved in mowing lawns, laying roads, installing pipes and other fuel-burning activities should approach their customers now about what they will have to report, he says.

Otherwise they may find themselves scrambling this October to recall how much fuel they used on a job six months ago.

NGERS is, in effect, laying the ground for a CPRS: by revealing how much carbon the big emitters release, the government now knows how much to charge them for the privilege in the future.

Both of the main political parties are committed to reducing Australia’s total carbon output. So while the future of the CPRS is uncertain, it is almost certain that the cost of carbon-spewing activities, from freight to air travel, will rise one way or another.

When politicians finally agree on what that way will be, SMEs are hoping they will receive a fair share of any compensation.

As the Australian Chamber of Commerce and Industry and Council of Small Business Organisations of Australia noted at the time, the CPRS that fell over last December mainly compensated big businesses and households.

Despite the economic importance of SMEs- they employ two in three non-government workers and account for half the country’s output – they qualified for just one assistance measure of the seven offered to big companies.

At its January board meeting, the council identified the “unintended flow-on effects of the CPRS for small business and subsidies for householders and the “big end of town”. As one of its key issues for 2010.

“Everyone should be playing at the same level,” Absolute Data’s Halter says.

“It should be exactly the same for everyone, or should we even be helping small business before the big guys?

“They work at much tighter margins and generally speaking, tend to be more family-oriented businesses that do less [environmental] damage anyway,” she says.

In the meantime, Halter would like governments to do a better job of helping SMEs to separate their actual environmental obligations from the self-serving “recommendations” of environmental consultants.

“For a lot of small businesses there is a fear that, as soon as a new category gets made, there are all these consultants out there running around.

“They charge big bickies to evaluate your business and you don’t know whether you should even be doing it, or how much is compulsory,” she says.

“So practical low-level education, sponsored by the government, sounds like a better approach to me.

“This will help people understand what they really have to do, and what they might want to do on top of that.”

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